MUMBAI: Bowing to the Indian film producers and distributors grouse regarding the multiple tax structure the film industry faces by way of varying structures of entertainment tax by various state governments, the Rajasthan government has declared 100 per cent exemption on entertainment tax in all theatres in the state.

The exemption has been made effective from 9 March.

With this exercise, Rajasthan becomes the first state to exempt theatres from entertainment tax.

In March 2009, the Rajasthan government started levying entertainment tax of 23.08 per cent on gross and 30 per cent on net sales. Earlier in 2008, the government had reduced the entertainment tax from 40 per cent on net to 30 per cent on net sales.

Entertainment tax structure in India varies across states and is the highest in Uttar Pradesh at 60 per cent. In Maharashtra, entertainment tax was reduced by five per cent in 2005 and now stands at 45 per cent.

In another measure, the Urban Development Tax, also applicable to cinema properties, has been reduced by 50 per cent in towns with population of less than one lakh.