Rebecca Hawkes ©RapidTVNews | 16-09-2011

Entertainment tax is to be levied on direct to home (DTH) satellite TV operators and on Indian Premier League (IPL) cricket matches in Tamil Nadu, in line with other states in India.

The Tamil Nadu legislative assembly passed a government sponsored bill on Wednesday (14 September) which will see DTH providers subject to 30% entertainment tax, on top of the existing service tax, according to local reports.

In addition, a 25% entertainment tax bracket has been introduced for IPL matches played in Chennai.

"Entertainment tax has been levied on DTH service and on cricket tournaments conducted by IPL by some of the states. So we in Tamil Nadu decided to include DTH service and cricket tournaments conducted by IPL within the definition of the term ‘entertainment’ and to levy tax under the Act,” said Commercial Taxes Minister SS Krishnamurthy, who moved the Bill.

India’s six private DTH operators – Dish TV, Sun Direct, Tata Sky, Airtel Digital, and Reliance Digital, Videocon d2h – are subject to entertainment tax in many other states, as well as the union government imposed service tax, but are generally unhappy about what they feel is excessive taxation.

Sun Direct, owned by Kalanithi Maran, reportedly has the largest share of the DTH market in Tamil Nadu, and a 17% share across all India – although cable is still the predominant means of receiving television throughout the country. There are some 20 million cable TV viewers in Tamil Nadu, and distribution of cable services there is also currently dominated by the Maran family.

It is thought the new DTH entertainment tax in Tamil Nadu should give a boost to state-run Arasu Cable Corporation, which was recently relaunched by the government to provide a competitor to Sumangali Cable Vision, part of the Sun TV Network.

Cable operators were delighted with the news. "We welcome the government move. Since there was no restriction on DTH services in the state, some private companies dominated the industry by offering low-fare packages," N Yuvaraj, president of Arasu Cable TV Operators Association was reported as saying in The Times of India.

The Bill also raises tax on cinema tickets in Tamil Nadu from 15% to 30% - a decision which has reportedly angered the film industry.

In July, the state’s high court had directed the Tamil Nadu Government to amend the state’s Entertainment Tax Act 1939 to include sports matches, in line with those imposed by other Indian states.