How Tamil Nadu became the State with the highest tax on a movie ticket

05-10-2017

Tamil Nadu has today become the State with the highest tax on movie tickets. After GST was introduced, ticket rates increased by 28% for theatres charging over ₹100 per ticket and by 18% for tickets below 100. Now the Greater Chennai Revenue Department has come out with an order on September 30, levying entertainment tax of 10% for Tamil films and 20% for Other Language Films (OLF). The Tamil Nadu Theatre Owners Association is meeting today to discuss the issue.

However, the most powerful theatre association in the country, Multiplex Association Of India (MAI), has jumped into the fray and shut down their screens in Tamil Nadu from October 3. They are protesting against what they call “double taxation” in the state; GST + Local Body Entertainment Tax (LBET). The MAI screens in Tamil Nadu include those of the market leader in India PVR Cinemas, Inox Leisure and Carnival Cinemas. The number of screens on strike in Tamil Nadu will be around 40 belonging to MAI out of 1,000-odd screens in the state.

An expensive affair

The new tax is sure to make movie watching even more expensive in the State. A ticket for a Tamil film will include GST in addition to the LBET which may vary between 28% and 38%. And if you are a fan of OLF, you may end up paying as much as 48% of the ticket cost in taxes.

A spokesperson of MAI says,“The LBET by Chennai Corporation leads to double taxation, on an industry which is already reeling under the impact of high tax rates and high rates of piracy. It could as well sound the death knell of the Tamil film industry. It also goes against the ‘one nation one tax’ policy and makes the very purpose of GST redundant.”

Meanwhile, the Chennai-based multiplexes and single screens are holding a meeting today (October 4) to discuss the issue, but it has no plans of a shutdown. They have submitted a memorandum to the State Government which will issue an order on ticket rates. The Chennai city multiplexes are looking for a net amount of ₹140 - ₹150 range plus GST.

Sources in the trade say that local theatre owners are willing to absorb the LBET, provided Government comes out with new ticket rates.

New taxes, newer rates

Abirami Ramanathan, president of Tamil Film Chamber of Commerce and a leading exhibitor, says, “We are not part of MAI. We will be taking a decision on LBET after our meeting on October 4, but we will definitely not shut down.”

The trade buzz is that the EPS Government feels that Kollywood is slipping out of its hands after former Chief Minister Jayalalithaa’s death. This move is seen as a ploy to regain control, especially at a time when Rajinikanth and Kamal Haasan have been seen targeting the ruling party.

Like in earlier times, they may even waive the 10% LBET for films with a ‘U’ certificate and Tamil title etc.

Tamil films, the priority

At the same time there is also a feeling within the industry that OLF is making deep inroads into hitherto Tamil cinema markets. The new taxation will also keep this under check. Plus the growth of national multiplex players in the State has set alarm bells ringing. The Tamil Film Producers Council is deeply worried about the present situation escalating at a time when the Deepavali season is around the corner.

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