A few theatres in Chennai, including Inox and PVR Cinemas, will remain shut on Tuesday in protest against the local body tax imposed on Tamil and other regional films. A few theatre owners have opined that this move will wipe away their margins and also kill the film industry.
Kailash B. Gupta, Chief Financial Officer, Inox Leisure Ltd said, “We are shutting down for a day. We will wait and see what happens.” He did not give a time frame on how long the screens will be down. Inox has nine screens in Chennai with a total seating capacity of 2,200.
PVR Cinemas refused to comment, but their website did not allow bookings for Tuesday. No bookings were taken over phone either.
On September 30, an order was issued by the Greater Chennai Corporation’s Revenue Department, levying entertainment tax on new and old Tamil movies at 10% and 7% respectively. New films in other languages will have to pay a 20% tax while old ones will be charged 14% tax. The order was for theatres located within the limits of the Greater Chennai Corporation. This is above the 18-28% Goods and Services Tax (GST).
Chennai crucial market
Chennai is a crucial market for the Tamil film industry. Closure for a day means heavy losses (including food and beverages).
A theatre owner said it would easily result in a loss of ₹10-15 lakh per day per theatre.
According to a KPMG India-FICCI report on the Indian Media and Entertainment Industry 2017, overall, 90% of the total Tamil language domestic box office collection was contributed by the Tamil Nadu market, of which 70% came from Tier I cities such as Chennai, Coimbatore, Madurai and 20% from Tier II and III towns.
The chief financial officer of another multiplex in Chennai said that he had been getting calls from producers of the Hindi and Telugu industry questioning why there was double taxation in Tamil Nadu alone.
A meeting will be held with all stakeholders within a day or two where the next course of action will be decided. Apart from Tamil movies, theatres in Tamil Nadu release films in Hindi, Telugu and Malayalam among others.
Earlier this year, the Multiplex Association of India had requested all the states that entertainment tax levied by local bodies should be subsumed in the GST.
The association said that if entertainment tax levied by local bodies is not subsumed in GST it could lead to double taxation.
“It will add to the cost of doing business,” the association had said then.
