Movie-goers in the highest cinema-consuming state of the country have been hit hard by the twin effects of GST and municipal taxes. As a result, their proverbial screens have gone black, and the must post-dinner entertainment has come to a halt.
Multiplexes in the city are shut as the Multiplex Association of India has called a strike, after being saddled with the burden of local body entertainment tax, over and above the 28% GST rate levied on movie tickets. The exhibitors and producers have demanded that the additional tax being levied by the corporation be done away with, as it goes against the very principle of 'One Nation One Tax' - which the Goods and Services Tax prides itself with.
After GST came into force on July 1, it subsumed the state government-levied entertainment tax on cinema tickets, which was 20% on average, across the nation. GST is levied at 28% for movie tickets priced above Rs 100, while the GST rate on tickets below Rs 100 is 18%. Through a Constitutional amendment, local bodies are permitted to levy entertainment tax.
Soon after GST came into effect, governments in Rajasthan, Gujarat, Maharashtra, Tamil Nadu and Kerala passed legislation authorising their local bodies to begin levying local body entertainment tax. However, so far, only Chennai has actually levied it.
The local body entertainment tax in Chennai is being levied at 8% for Tamil movies, 15% on non-Tamil Indian movies and 20% on English movies. For multiplex majors such as INOX Leisure Ltd and PVR Cinemas, whose theatres are shut in Chennai, Hindi and English films constitute a major part of the market. The entertainment tax on these movies have effectively risen to between 48% and 53%.
"If you pass on a 53% tax to customers, cinema tickets will be much more expensive for them. Even for us, if the cost for the customer is so high, it will adversely affect footfalls," said Deepak Asher, Chief Financial Officer of INOX, and President of the Multiplex Association of India.
"Our demand is simple; that the local body entertainment tax should not be levied. We are paying 28% GST, and this is, in any case, higher than the entertainment tax that was being levied earlier. This goes against the very principle of One Nation One Tax," Asher added.
"The Central Government has introduced GST to remove the multi-layer tax regime of the past. By allowing municipalities to charge local body taxes, it has defeated the entire GST exercise. Is it fair for any Indian citizen to pay 53% tax on a cinema ticket? This will restart the terrible days of piracy and black marketing," said Siddharth Jain, Director, INOX Leisure Ltd.
With multiplexes in Chennai shut till the issue is resolved, viewers in the city will be deprived of major Diwali releases such as Amir Khan-starrer 'Secret Superstar.'
Jain added: "The local government in Tamil Nadu needs to understand the regressive step it has taken. When the country is trying to go forward, such steps are taking us backward. This is going to hurt millions of citizens in Chennai, who are amongst the most avid cinema lovers in the country. In fact, the highest occupancy ratio of cinemas is in Chennai. People worship cinema as a medium there."
Actor Vishal, president of Tamil Film Producers Council, said, "We are against the double taxation. We held talks last week with the state government, which had agreed to bring down the entertainment tax to eight per cent from 10 percent. We also understood the government's problem, and accepted the reduction in the taxes. Now, the GST of 28 per cent and entertainment tax of 8 per cent will be charged on revised base fare fixed by the state government. Our endeavour was that the public should come and watch the films in theatres paying only the ticket price fixed by the government, nothing more. People should complaint wherever tickets are sold at higher prices."
M Rajinikanth, a film buff in Chennai, said, "I watched the special show of actor Vijay's Mersal paying Rs 1,000 for a ticket. Despite the ticket price hike, people are coming to watch movies in theatres. But the government should act on the theatres for selling the food items at exorbitant price and collecting very high parking charges."
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