The Union Budget 2010-11 proposes to rationalize the differential custom duty structure for importing digital masters of films for duplication or distribution in electronic medium and in cinematographic film. Henceforth custom duty would be charged only on the value of the carrier medium. However in such cases the value representing the transfer of intellectual rights would be subjected to service tax, implying thereby that all revenues generated out of transfer of Intellectual Property Rights will be subject to service tax. Similar tax treatment is being extended to music and gaming software imported on digital media for duplication.

Also, promotional material like trailors, making of films, etc imported free of cost in the form of electronic promotion kits (EPK)/ Betacams will be fully exempted from basic customs duty and Countervailing Duty.

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