Meeting of State Information and Broadcasting Ministers
November 7, 2001, New Delhi.

Presentation on the Indian Music Industry by Mr. S Shidore, Indian Music Industry
Sales Taxes on Music carriers in Different States in India

Presently different states in India have different levels of sales Taxes on Music cassettes & CDs. There is a wide disparity in rates e.g.: 15.3 % in Maharashtra, 15% in Bihar and 4.6% in Rajasthan.

This disparity gives rise to infiltration of material from one state to other and the legitimate sales in states with higher tax suffers. (E.g. Material sold or billed to say Rajasthan is sold in Bihar. Although it is sold in Bihar it is seen as sales in Rajasthan at 4.6% ST). If the S.T. is pegged at lower levels say 8% in all states uniformly, this anomaly can be remedied.

We strongly believe that the sales tax collection would increase due to higher quantity sold and correctly accounted for in the state in which it is actually sold. We feel that the Musicassets and CDs should not be treated as just consumable commodities but propagators of the music culture of our country. We recommend that if at all S.T. is to be continued on Audiocassettes and audio CDs; it should be imposed at the uniform rate of not exceeding 8% in all the states and Union Territories. We understand that in some states the S.T. has been increased to 8% from lower levels; but the states where it is at higher levels have not brought it down. This is undesirable and we earnestly request you to get this anomaly removed.

We further request that the Audio Compact Discs (CD) should not be taxed at higher levels. In India, the growth of this medium is very slow and it is still in early stage of market penetration. The CD manufacturing industry requires encouragement & growth at this stage. The S.T. on cassette & CD should be the same.

The higher the taxes the higher are the difference between the authorized and pirated product (Pirates do not pay any taxes). The margins of the legitimate producer and thus their growth suffer. The enforcement of copyright law is not very forceful in our country due to various reasons. The government can at least bring down the taxes so that the encouragement to pirates (although indirect and unintentional) is denied and the additional burden on the legitimate producer is reduced.