With GST, it’s taxing times ahead for Kollywood

The positives are uniform taxation and transparency in box-office collections

The April 14 Tamil New Year releases took just an average opening at the box office, due to stiff competition among themselves. Despite their ‘U’ certificate and tax-free status in the State, the trade says it made little difference. In contrast, critically-acclaimed films like Dhuruvangal Pathinaaru and Maanagaram , both ‘UA’-certified films suffered due to the skewed tax and censor policy.

With the implementation of GST from July 1, all this will change for Kollywood; there will be no more entertainment tax, which varies from 30% in Chennai and Coimbatore, to 15-20% in smaller towns and Panchayats. Instead, there will be a uniform rate (between 12% and 18%) levied for Tamil Nadu. For example, movie tickets in Chennai, which cost ₹120 (gross amount, including taxes, shared by distributors and exhibitors) will now cost anywhere from ₹134.4 to ₹141.60.

The big advantage is that it becomes a level playing field for all films, big or small. There will be no more tax-free films, nor will the certification (‘U’, ‘UA’ or ‘A’) matter. Filmmakers will no longer have to compromise on their creative titles (a

Power Pandi need not become

Pa Paandi ) for tax exemption. The GST is expected to bring transparency with a unified tax system at the box office, and bring down corruption. But what about its short-term impact on the film industry?

G Dhananjayan, founder of the BOFTA Film Institute, says: “The current system of paying part cash and part cheque will be done away with. All theatres must sell tickets at fixed prices and pay their GST dues to the Government. Selling tickets at higher rates during the opening weekend and avoiding taxes becomes difficult. We may soon get to know actual box-office numbers rather than the inflated numbers that are generally reported.”

L Suresh of Ananda Pictures (a leading distribution company in Tamil Nadu), also the president of South Indian Film Chamber of Commerce, says: “The GST is going to badly affect regional cinema in Tamil Nadu and Karnataka. The net revenue to the producers will be down by 12-18%, and it is going to have a far-reaching effect on the Tamil film industry. The positives are uniform taxation and transparency in box-office collections.”

One of the biggest advantages of GST is that film producers will no longer have to pay exorbitant taxes in the form of service tax for theatrical, satellite and digital rights. All of them will come under one umbrella once GST kicks in.

A leading Tamil producer fears there will be chaos in the industry once GST is implemented. “As it is, the film industry is not doing well, and the GST will deal a deadly blow to it. There’s no longer a single buyer for films in Tamil Nadu; there are individual local distributors who deal only in cash and do not give a minimum guarantee or an advance.”

In the second half of 2017, after GST is implemented, biggies like Ajith’s Vivegam , Suriya’s TSK , Vikram’s Dhruva Natchathiram , Sivakarthikeyan’s Velaikkaran , Rajinikanth’s 2.0 and a few others are due for release.