Shahrukh Khan and Sushmita Sen at the launch of new models of a watch. File picture

Mumbai, Oct. 4: Now that getting King Khan to chill in a bathtub with rose petals floating and PYTs snuggling has gotten a wee bit costlier, the queue to have celebrities endorse products is thinning.

A law amending the Bombay Stamps Act of 1958 has had the advertising, broadcasting and film fraternities screaming: all contracts signed in Maharashtra that exceed Rs 1 lakh now attract a stamp duty of 0.25 per cent.

“Since the law came into force, clients are increasingly dropping celebrities and going in for non-celebrities to endorse products. This is certainly becoming a trend,” said Vineeta Bangad, vice-president, Celebrity Management Service, Percept D’Mark.

Although clients are still largely unaware of the law, many went back to review their proposals when told of the huge amounts of duty they would have to cough up, she said.

“Celebrity endorsements involve big money. So the total amount paid in duty, which includes 10.2 per cent service tax and 0.25 per cent stamp duty, works out to be pretty steep.”

The film industry is sore because the amended clause says duty will be levied on “specific performance by any person or group of persons where the value of the contract exceeds Rs 1 lakh”. This includes the signing amount paid to actors.

The Film Federation of India is mulling moving court if the law is not revoked. A decision will be taken after it holds talks with chief minister Vilasrao Deshmukh.

“If the government does not reconsider its decision, Bollywood producers will be forced to go to other states to sign agreements. This will be a huge loss for Maharashtra,” said film federation secretary Supran Sen.

“We hope to get an audience with the chief minister next week and convince him about the financial pressure the law has imposed on producers,” he said.

“Bollywood apart, the local Marathi film industry has also been badly affected. Marathi films have much smaller budgets and are suffering the most.”

Adman Prahlad Kakkar echoed Sen. “I mean, how many more cuts does the government want from us? This is outrageous.”

As yet, reports of contracts being signed outside the state have not started trickling in, Bangad said.

“It would be unfeasible, especially when both the advertiser and the celebrity are Mumbai based. No one wants to face the hassle of operating in the jurisdiction of courts other than where they are domiciled.”

As unregistered agreements could create legal hassles, people were grudgingly paying up and hoping the government would eventually see sense, she added.

Mumbai superintendent of stamps B.J. Patil said the government would keep tabs on the fallout of the law. If things didn’t work to plan, the state would move the Centre to amend the Indian Stamps Act as well.

“Eventually, we want to bring everyone who scripts an agreement under the legislation. It is in people’s interest that they register agreements and contracts because it stands them in good stead in case of legal disputes. Besides the duty imposed is a very small amount.”

He said over the last five years there had been a big rise in the number of registrations. The volume of revenue had jumped from less than Rs 1,400 crore to nearly Rs 2,700 crore this year. “We hope to mop up an additional Rs 100 crore this year,” he said.