The Tamil film industry is in a state of panic. The reason being that the rate of tax has been fixed at the highest slab of 28% for the entertainment industry by the Goods and Services Tax (GST) Council. This announcement has created shockwaves across the film industry, particularly in Tamil Nadu. The audiences will hereafter have to pay more for movie tickets in Chennai, which has the cheapest ticket rates among all major metros.
Tamil Nadu, which had various slabs of entertainment tax from 12% to 30%, will now have a uniform GST of 28% from panchayat to metro cities, which means that a single screen in a C centre will pay the same tax as a high-end multiplex in Chennai. As per trade sources, the highest ticket rate in a Chennai multiplex may go up from ₹120 (which will become net amount) to ₹153.60 (inclusive of 28% GST), from July 1, assuming that the GST is going to be over and above the MRP. President of Chennai Theatre Owners Association, Abirami Ramanathan, says: “There is no clarity on how new ticket rates will be calculated. We will have to wait and see.”
A setback
The proposed shutdown of the industry by Vishal, the president of Tamil Film Producers Council, from May 30,has been dropped. The State Government has to come out with a GO on the revised ticket rates and lift the cap on existing ticket prices, before July 1, in order to implement GST. The government also needs to work out details on how it will quell the unrest in local bodies which have for years been benefiting from entertainment tax.
According to L Suresh, president of South Indian Film Chamber of Commerce (SIFCC), the GST rate of 28% on cinema tickets is a huge setback for the film industry. “We had proposed a rate of 12% in our representations to the Government, in order to revive a business which has been struggling because 90% of films released are failures, and also have to deal with issues of piracy. It is strange that we are being taxed exactly in the same slab of 28% as a luxury five-star hotel. There should have been a four-slab tax rate for cinema, just like there is for the hotel industry. It is unreasonable that a C-class theatre in a panchayat and a multiplex in a city are charged the same GST rate.”
Creative freedom
Beginning July 1, the Tamil Nadu government cannot provide tax exemption for any film, which will reduce their influence in Kollywood. In the last six years, many films were given tax exemption, with rumours of pay-offs. The best thing about GST is that it provides creative freedom to new-age directors, who need not compromise on their content to make it suitable for a U certificate. Vikram’s Sketch (slated for July release) looks likely to be the first Tamil film with an English title in many years, following GST.
The way forward
June will see the release of at least 20 Tamil films, which have been censored, and some of them with U certificate have got tax exemption. Jayam Ravi’s Vanamagan (U) has announced a June 23 release along with Simbu’s Anbanavan Asaradhavan Adangadhavan . Selvaraghavan’s Nenjam Marappathillai (UA) is also most likely to release before GST comes into effect.
Once GST comes into force, production will come down, as finances are likely to dry up. A leading financier confessed: “Film business today is very risky, and under GST, no film will get tax exemption, which was a huge bonus for big star movies in Tamil Nadu. Now, all MGs (Minimum Guarantee) and even deposits will not be paid by distributors or exhibitors. The star prices will have to be slashed by 50%, if films are to be viable, and that is unlikely. I believe GST will sound the death knell of many film companies.” Meanwhile, SIFCC is supposed to have approached Rajinikanth and Kamal Haasan to use their clout in Delhi to modify the single GST rate for entire Tamil Nadu and instead make it a slab system.
