In an effort to increase entertainment tax collections from cable operators, the Maharashtra government has announced that it will collect duty on cable television through public auction from 2002-03.

State finance minister Jayant Patil, while presenting the state's budget yesterday said: "Given the constraint of manpower, entertainment duty payable on all cable connections cannot be collected. Therefore, with a view to reduce expenditure on recovery and to increase revenue, I propose to collect entertainment duty on cable television by public auction from the financial year 2002-03. The Bombay Entertainments Duty Act, 1923 will be amended suitably."

This is yet another attempt by the state government to bring tax collection in line with the actual number of cable connections. Maharashtra is estimated to have crossed 6 million cable TV homes but government records reveal only 2.5-2.6 million connections.

The govenment will auction the right for collecting taxes to private parties for recognised territories, it has been reported. The chosen party will collect tax from the local cable operator. However, as bidding cannot be done without adequate research the government is hoping that the private party's effort would make tax collections truer to the actual number of cable connections.

Cable operators see this as another move that could adversely impact the cable television industry in the state and complain that it appears to support broadcasters.

Meanwhile, in a related move, Patil further announced in his budget that he would be revising rates of entertainment duty leviable on discotheques and would include sponsorship amount of fashion shows and other events in the tax base. For this proposal also, the Bombay Entertainment Duty Act will require amendment.