Addressing the financial difficulties faced by artists and workers of the media and entertainment industry and the need to provide them with social security[1], the Karnataka government introduced the Karnataka Cine & Cultural Activists Welfare Bill, 2024 (‘Bill’)[2] on 19th July 2024.
The Bill defines “Cine and Cultural activists” as any person “employed in the field of cinema to work as an artist (including actor, musician, or dancer) or to do any work, skilled, unskilled, manual, supervisory, technical, artistic, or otherwise, or any person who is engaged in such other activities as declared by the government, by notification in the official Gazette, for the purpose of this Act.”
Under the Bill, a cess not exceeding 2% (two percent) but not being less than 1% (one percent) shall be levied on cinema tickets, subscription fees, and all revenue generated from related establishments. Related establishments, as per the Bill, include standalone cinema theatres, multiplex halls, over-the-top (OTT) platforms, television channels, and such other establishments as notified by the Karnataka government from time to time. The Karnataka government has also stated that it intends to extend this cess to plays staged within the state of Karnataka.
Under Section 9(4) of the Bill, the cess ranging from 1-2% may be revised by the Karnataka government periodically, after every three years, as may be required for the implementation of welfare schemes under the Bill.
The Bill provides for a fund to be established for the benefit of registered Cine and Cultural activists. This fund, called “The Karnataka Cine and Cultural Activists Social Security and Welfare Fund,” shall be established through the collection of cesses, contributions made by registered Cine and Cultural activists, and grants received from government authorities, among other sources.
Another key provision of the Bill is the constitution of a Karnataka Cine and Cultural Activists’ Welfare Board (‘Board’) with its headquarters in Bengaluru. The Board shall ensure the registration of Cine and Cultural activists in accordance with Section 7 of the Bill and shall issue a unique identification number to each of them. It shall also be tasked with creating welfare schemes and ensuring that Cine and Cultural activists have access to these benefits. The Board shall be responsible for establishing a redressal mechanism in accordance with Section 12 of the Bill to address the grievances raised by Cine and Cultural activists in relation to entitlements, payments, and other benefits under the provisions of the Bill.
Penalties for failure to comply with the provisions of the Bill have also been specified, stating that “Any employer who contravenes the provisions of this Act or rules made thereunder or who fails to comply with the provisions of this Act or the rules made thereunder, the Board or the officers authorised by the Board in this behalf may impose a penalty upon him which may extend up to INR 10,000/- (Indian Rupees Ten Thousand Rupees only) for the first contravention and up to INR 1,00,000/- (Indian Rupees One Lakh Rupees only) for subsequent contravention.”
Various bodies in the media and entertainment industry plan to submit representations to the Karnataka state government seeking a reversal of the Cine and Cultural Activists Welfare Cess imposed under the Bill on cinema tickets, television, and over-the-top platform subscription fees, and all revenue generated from related establishments such as cinema theatres, multiplex halls, OTT platforms, television channels, and other such establishments notified by the Karnataka state government. In addition to the Karnataka state government, petitions to the governor and the Ministry of Information and Broadcasting (MIB), the industry’s nodal ministry, may also be submitted by key players in the media and entertainment industry.
Industry bodies likely to seek the reversal of the imposition of the Cine and Cultural Activists Welfare Cess include the Internet and Mobile Association of India (IAMAI), Multiplex Association of India (MAI), Indian Broadcasting and Digital Foundation (IBDF), and the Producers Guild of India (PGI), out of concern for increased costs for consumers. However, if the Karnataka state government refuses to address the concerns raised by industry bodies, the industry bodies may challenge the applicability of the Karnataka Cine & Cultural Activists Welfare Bill to OTT platforms and television channels.
Additionally, such a proposed cess on supply or consumption may be contrary to the broad objectives of the uniform tax structure envisaged under the Goods and Services Tax (GST) regime, thereby resulting in disparity with other industries and defeating the purpose of ‘one nation-one tax’ under the GST regime.
The Karnataka Cine & Cultural Activists (Welfare) Bill, aiming to provide social security to Cine and Cultural activists in the industry, has been passed by both houses of the state legislature and is pending the governor’s assent.
As the industry navigates the implications of this Bill, the ongoing dialogue between the Karnataka government and media industry bodies will be crucial in determining the balance between providing social security for cultural activists and maintaining the economic viability of the media and entertainment sector. The outcome of these discussions will likely set a precedent for how similar issues are addressed in other regions and industries across India.
– Samyak Surana, Senior Associate
Rhea Lokeshwar, Associate
Footnotes
1 The IndianExpress, Karnataka introduces welfare bill for cine workers, cess of up to 2% on movie tickets for welfare fund, 20th July 2024, https://indianexpress.com/article/cities/bangalore/karnataka-introduces-welfare-bill-movie-tickets-welfare-fund-9465735/
2 [2] Karnataka Cine & Cultural Activists Welfare Bill, 2024, https://erajyapatra.karnataka.gov.in/WriteReadData/2024/7421.pdf
