With film industries across the country demanding that the 28% Goods and Services Tax (GST) on cinema be reduced to 5-8%, Kollywood insiders say implementation of the new tax code without deregulating ticket prices will disproportionately affect small and medium budget films.
Big budget films may not be immune to its impact either. Industry sources say distributors have already hinted to producers involved in making mega budget flicks featuring big stars that they will not be paying the ‘Minimum Guarantee’ upfront, as before.
The argument is that such a high percentage of GST will completely cut off small and medium budget films from the box-office race, as the ‘release window’ for such films shrinks.
Alternative avenues
Independent film-makers believe producers of small budget films would have to seriously consider releasing them directly on television or video streaming services such as Netflix.
“This flat 28% rate is the last straw because there is also an exhibitor’s share of 50%, distributor’s share of 15% and then the per-print cost. In an environment where there is a cap on ticket prices, cinema will have to get bigger to earn that big-screen viewing. Right now, there is space for all kinds of films at your local cinema hall but soon, it will be only for the rich storytellers of the world,” said a film-maker.
As it is, films with smaller budgets are struggling to draw sizeable audiences at cinemas.
“This rate is the same as the one recommended for racing, gambling and casinos. With States empowering local bodies, a dual taxation would sound the death knell for an industry already reeling under piracy,” said Deepak Asher, president, Multiplex Association of India.
Producer G. Dhananjayan said that the implementation of GST must be accompanied by an increase in the cap on ticket prices. “Failing to do so would bring about a situation wherein the government itself will end up encouraging ticket sales in the black market. Already, distributors have said that they will not buy big-budget movies for a ‘Minimum Guarantee’ until the confusion in ticket prices is resolved,” he said.
While fears and doubts exist about how GST would affect the film industry, there are those who believe that it would also help the industry break from the shackles of the State government, which has thus far reserved the right to provide, or deny, entertainment tax exemption to films. Producer Sashikanth said that film-makers would finally be able to stop worrying about their film’s certification.
“The content will hopefully become edgier. Even with higher ticket prices, a good movie will continue to do well,” he said.
