M'shtra to farm out cable tax collection soon

The state government will soon start auctioning the entertainment tax collection work on cable television connections. It hopes to double its income through privatisation of tax collection from the present level of around Rs 55 crore per annum.

At present, the responsibility of collecting entertainment tax rests with cable operators. However, though cable operators collect the tax from the customers, they under report the number of connections, thereby duping the government of its due share. As per the entertainment tax department records, there are only 24 lakh cable connections in the state.

The state has a three-tier structure for entertainment tax on cable television. Cable connection holders living in cities such as Mumbai, Pune, Aurangabad, Nagpur, Nashik have to pay Rs 30 per month. In mid-sized towns, the tax is at Rs 20 per month, while in rural areas it is Rs 10 per month.

The department periodically carries out surveys to assess the real number of cable connections in each cable operator's area. But the department lacks the requisite staff to carry out these surveys in a vast area on a regular basis. This has resulted in under-reporting by cable operators, said a senior official from the department.

"Thus we have decided to auction the rights to collect entertainment tax and bids were called. But due to some procedural lacunae, high reserve price and cable industry primarily being run by people with muscle power, there was hardly any response," he added.

Elaborating on his point, he said, earlier auctions were carried out for an entire district. But a district being too large a unit, there was not enough response. "This time, we plan to divide each district into smaller and more viable units," said the official.

Last time, the reserve price for an area, where the department used to collect Rs 1 crore, was fixed at Rs 5 crore, so no one was willing to come forward.

"However, now we are carrying out an exercise to fix the price realistically," he pointed out.

"But since all these amendments are related to tax, we need to get a go ahead from the state legislature and we are trying to table the bill containing these amendments in the forthcoming budget session of the assembly," he said.