Riteish Deshmukh and Vivek Oberoi raise valid OBJECTIONS to GST for the movie industry

By Faridoon Shahryar -

June 10, 2017 - 12:03 PM IST

The film industry is going through a tough phase. The recent imposition of 28% GST and the fact that it has been bracketed with sin industries like gambling and alcohol has left the film industry disheartened. In a candid Bollywood Hungama exclusive conversation with Faridoon Shahryar, Riteish Deshmukh and Vivek Oberoi give a practical explanation that why the tax structure must be revised and why it's important that the industry gets more proactive support and respect since the Indian movies and movie stars are one of the biggest cultural ambassadors of the country.

Riteish Deshmukh and Vivek Oberoi raise valid OBJECTIONS to GST for the movie industry

28% GST will be levied on the film industry. It may be revised. The interesting part is that the regional cinema which had either a zero tax facility or very minimal tax was imposed, even they will fall in the same bracket and it can have disastrous results. What are your thoughts on that?

Riteish Deshmukh: There are 2 things. One thing about GST is that, the moment you start paying money you’re paying your tax. Earlier the regional cinema was exempted but even they will have to start paying tax. But they’ll have to recover tax from the government. So they have to figure out a system where regional cinema shouldn’t be affected. So let me explain you GST ka issue. Suppose if you're doing a business and you know that if you are making 10 cars then you're able to sell 10 cars as well. There is a flow in the business and the company runs accordingly. But in the film industry every day we are churning out a new product. It may be liked by people or it may not be liked by people. We are working in an industry where the success rate is 7-10% and 92% films are not working. It means that we have to submit GST even at those films which are running into losses. GST is 28% and if the budget of your film is Rs 10 crore, then GST will be Rs 2 crore 80 Lacs and the budget becomes Rs 12 crore 80 Lacs. If your film flops and say makes Rs 5 crores then with GST the loss gets doubled. So it’s a very difficult scenario for entertainment which is a very fluctuating industry. In a plain industry there are no changes on a daily basis. The problem with our industry is that if you make something similar each time, then it won't work. Every time we are testing a new product in the market. That’s a risk considering that the 90 percent of the times the product fails.

Vivek Oberoi: GST for the country is important, but what has gone wrong is that they only have outside perspective of the industry. Jab aap kisi industry ko tax karte ho sabse pehle toh aapko dekhna hai GST ne film industry ko Sin tax mein kyun rakha hai alcohol gambling etc ke saath? What does gambling contribute to the economy? Cinema contributes so much. We contribute to the culture. Firstly, Regional cinema, we have many different cultures; you are punishing those cultures by taxing them. You cannot tax Marathi cinema. You cannot tax regional cinema. That is the expression of regional identity. That is absolutely wrong. The cultural difference is the beauty of this country. Hindi cinema has been a huge ambassador. Go ask anyone outside India what they know about India? Bollywood and Yoga. We have been such a huge cultural ambassador.

Riteish: And even the 28% tax. There is no protection. There is no piracy protection. We are losing 90 percent of our business to piracy. Today ticket sales are 2 crores. Highest is 3 crores in a nation of 125 crores. Your conversion rate is 2 – 3 percent. So 99 percent India picture he nahi dekhti.

Vivek: Aap special economic zone mein aate ho. Ek industrial park banate ho. Ek infrastructure banaate ho. Humara infrastructure kahan hai? Why are they not building theatres for us, why not studios?

Riteish: When you look at theatres they are in prime properties, rentals are high. So when they want to play a movie they say we are going to take 50% of your profit. So as a producer 100 Rs ticket aap de rahe ho. 3 hafte agar picture chalti hai toh producer ke haath mein sirf 40 rs aata hai, 60 rs theater ke haath mein aata hai. 30 rs ticket ka toh tax main bhar deta hoon. So yes it needs to be revised.