"Chief Minister Akilesh Yadav has watched the movie and has directed that such films should be exempted from the entertainment tax," a senior officer said here.
The portrayal of Hindu sentiments in the movie has evoked criticism across the state.
Hindu Yuva Vahini activists yesterday burnt the effigy of Aamir and staged a protest against the screening of 'PK' at a cinema hall in Bareilly.
The HYV activists staged a protest before Prasad talkies in Kotwali police station area and also barged inside forcing the cancellation of the show.