Doing the maths: how the Tamil film industry’s revenues are set to change after GST

How will the new taxation policy translate in terms of revenue for the Tamil film industry? We find out.

The Tamil Nadu Film Chamber of Commerce on Friday announced an indefinite shutdown of theatres across Tamil Nadu from July 3 due to lack of clarity on the tax amount that will be levied after GST implementation. A scene at Sathyam Cinemas on Monday.

Distributors and theatre owners in Tamil Nadu are in a fix after the implementation of the Goods and Services Tax. They have to cough up a 30% local body tax in addition to the 18-28% GST. So how will this translate in terms of revenue for the Tamil film industry? We find out.

 

The following calculations, done by The Hindu, show the revenue fall for both distributor/producer and cinema halls assuming they split the ticket price. Taxes have been calculated on two categories of tickets — the ₹120 tickets and the ₹50 tickets. The second scenario post-GST — involving an extra 18-28% tax on the local body tax — arises due to lack of clarity in the tax structure. Sources say a clearer picture may emerge in a day or two.

Assumed ticket price: Rs 120

Scenario	Tax%	Amount paid as Tax	Revenue after tax	Producer/distributor share (assumed 50%)	Cinema hall's share (assumed 50%
Before GST, if Entertainment Tax applies	30%	36	84	42	42
Before GST, if Entertainment Tax exempted	0%	0	120	60	60
After GST [Local body tax (30%) + GST (28%)]	58%	69.6	50.4	25.2	25.2
After GST [Local body tax (30%) + GST (28%) + 28% on local body tax]	66.40%	79.68	40.32	20.16	20.16

 

A theatre owner or a distributor may lose ₹35 to ₹40 per ticket sold post-GST.

Assumed ticket price: Rs. 50

Scenario	Tax%	Amount paid as Tax	Revenue after tax	Producer/distributor share (assumed 50%)	Cinema hall's share (assumed 50%
Before GST, if Entertainment Tax applies	30%	15	35	17.5	17.5
Before GST, if Entertainment Tax exempted	0%	0	50	25	25
After GST [Local body tax (30%) + GST (18%)]	48%	24	26	13	13
After GST [Local body tax (30%) + GST (18%) + 28% on local body tax]	53.40%	26.7	23.3	11.65	11.65

 

A theatre owner or a distributor may lose Rs. 12 to Rs. 13.5 per ticket sold post-GST.

Loss for a cinema hall per show

The table shows the revenue loss estimate per show of a multiplex cinema hall in Chennai with 1627 seats after the new tax regime. Revenue before GST has been calculated assuming tax exemptions and a 50% split between the cinema owner and the distributor.

Ticket cost	Total seats	Cinema hall revenue before GST	Revenue after GST and local body tax
			Scenario 1	Scenario 2
₹120	1083	₹64980	₹27291	₹21833
₹110	312	₹17160	₹7207	₹5765
₹10	232	₹1160	₹603	₹506

 

The multiplex owner may lose around ₹48000 to ₹55000 per show after the new tax regime.