MUMBAI: In a pre-budget memorandum, the beleaguered music industry has suggested a reclassification of its current revenue neutral rate (RNR) status to a new in par Intellectual Property Rights (IPR) status under the new uniform value-added tax (VAT) regime to be implemented from 1 April 2005.

Indian Music Industry (IMI), an association of music companies, states in the memorandum that the industry be classified at par with other IPR, in which the tax structure be between 0-4 per cent.

The industry is currently categorised under the RNR category wherein a tax rate of 12.5 per cent would be applicable.

The music industry has seen losses of more than Rs 18 billion during last three years, the IMI claims. This can be attributed to two major external factors - piracy and improper taxation.

IMI has recommended a 20 per cent imposition on cess tax on those plants which are not using the international Source Identification (SID) code. The code created by International Federation of the Phonographic Industry (IFPI) helps trace CDs to the plants from where they are manufactured.

However, in India most CD manufacturers or entertainment companies refuse to implement the same within their organisation.

The implementation will create a direct impact on piracy and provide additional funds for the government.

IMI also wants an anti-piracy task force to be created, similar to the Central Industry Security Force, to defend IPR.