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Tamil Nadu film theatres in distress over GST, corporation tax; ticket caps add to woes

LiveMint logoLiveMint 03-07-2017 Lata Jha

New Delhi: The future of about 1,060 movie screens in Tamil Nadu remains undecided as the Tamil Nadu Film Exhibitors Association suspended shows Monday onwards in response to the 30% corporation tax introduced by the Edappadi K. Palaniswami government in addition to the 28% GST rate.

The move effectively takes entertainment tax in the state to about 58% from the tax-free status previously accorded at least to the local Tamil films. Even the 18% rate levied on theatres that price tickets below Rs100 would mean 48% tax for them, a move that trade sources term as ‘ridiculous.’

To be sure, this is a double whammy for exhibitors in the state, who like all others in south India, have worked with strict ticket price caps until now and cannot afford to pass on the extra tax burden to consumers. In Tamil Nadu, tickets for single screens and multiplexes are capped at Rs50 and Rs120 respectively. In the Andhra Pradesh-Telangana region, the ceiling is fixed at Rs100 for single screens and Rs150 for multiplexes.

However, unlike Tamil Nadu, no other south Indian state government has imposed a local tax in addition to GST yet. Abirami Ramanathan, president of the exhibitors association, admitted they had asked Tamil Nadu finance minister D. Jayakumar to explore the possibility of an increase in ticket rates.

“We’re not fighting anybody, we’re only requesting the government, as we’ve done earlier as well, to allow some flexibility in prices apart from removing the entertainment tax in addition to GST,” said Rakesh Gowthaman, managing director of Vettri Theatres in Chennai. “It’ll make the business more transparent and healthy.”

To be sure, Tamil Nadu has a history of according tax benefits to films quite easily. Under the Jayalalithaa regime, any film with a Tamil movie title and a ‘U’ certificate from the censor board would be granted tax-free status. That meant nearly 80-90% of the Tamil films released per year would enjoy these benefits.

Ramanathan added that members of the association had met Jayakumar earlier in the day and while there was no clarity on when film screenings would resume, they were hoping for a prompt response.

Other members of the industry are less hopeful. Independent trade analyst Sreedhar Pillai pointed out that the one film to bear the brunt would be Ivan Thanthiran, a low-budget comedy starring Gautham Karthik that opened decently last Friday. This week’s scheduled releases that include a drama called Thiri, action thriller Pandigai and crime thriller Nibunan, are likely to be postponed.

“It’s simple, we are only the collecting point, the money only goes further into the industry which at this rate of taxation, will collapse,” Ramanathan said.

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