Theatre owners across Tamil Nadu will down shutters from Monday amid the lack of clarity over prices of tickets under the Goods and Services Tax regime.
The theatre owners are especially unhappy with the State imposing 30% local body tax, industry sources said. The Goods and Services Tax Council has fixed the tax rate for movie tickets under two categories: 18% for tickets costing less than ₹100 and 28% for tickets priced over ₹100.
At present, ticket prices in the State are capped at ₹50 for single screens and ₹120 for multiplexes with three or more screens. The price is inclusive of entertainment tax, which ranges from 20-30%, based on location.
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Exemptions withdrawn
Under GST, the exemptions granted for movies with Tamil titles have been done away with. Also, local bodies which collected the entertainment taxes are out of the purview of GST. So, they are allowed to collect entertainment taxes over and above the 18% and 28% taxes fixed under GST.
“The Tamil Nadu government has issued an ordinance which states that the theatres have to pay a 30% tax to the local body. This is in addition to the GST rates and on each local body tax, we have to pay an additional 8% GST. So the total tax rate is 66% in Tamil Nadu. For a ₹100 ticket, we will be paying almost ₹66 as tax, which is unviable,” Abirami Ramanathan, president of Tamil Nadu Theatre Owners and Distributors Association, said.
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He sought the withdrawal of the 30% tax, pointing out that Kerala had withdrawn the local body tax. He said that films would be screened on July 1 and July 2 and theatres would shut down from Monday.
“The tax ceiling is ₹120 and the levy of GST and local body tax seems to be within that. There is no clarity from government on the cap yet. If the cap continues and taxes are applicable within that, the final value to be shared by the producer/distributor is very less,” Udeep B, managing director, Mayajaal, said.
According to a report by Edelweiss, the occupancy rate in the Tamil Nadu market is 65-70% . It also noted that the Telangana government has mandated an increase in multiplex ticket prices, which is marginally positive for them. “In Telangana, tickets at the multiplexes will now cost ₹300 for gold/royal class and ₹200 for executive/regular class as against ₹250 and ₹150 currently (including taxes), respectively.
However, multiplexes would have to charge 20% lesser than the maximum ticket price for seats in the first 2 rows from the screen. Further, the film development corporation will fix the online charges. The entertainment tax (ET) in Telangana is 20%,” it added.
(With inputs from Sanjay Vijayakumar, Udhav Naig and Sangeetha Kandavel)