Theatre owners’ protest in Tamil Nadu to hurt box office collections of new releases

At a time when the government is trying to iron out rough edges of the new tax system, the entertainment industry in Tamil Nadu is tackling with the problem of double taxation.

The state’s film industry is urging the government to do away with the dual taxes but until then the Tamil Nadu Film Producers Council decided not to release any films from this Friday to show their dissent against the taxes levied on movies.

In conversation with Moneycontrol, Rahul Puri, MD of Mukta Arts said, “Chennai is not a large market for Judwaa 2 so the impact will be minimal on that film but certainly there will be an effect on Spyder which was made in Tamil and Telugu. Its main draw will come from Andhra and Telengana but Chennai's protest will hurt.”

Although Saif Ali Khan’s new venture Chef has not received a good response, but not releasing in Tamil Nadu may impact its business even further. “There will be some impact but mostly that film business is outside of South, so I don't think it will be telling. Chennai though is a metro and not having the film release there will be a cause for concern to the producers,” added Puri.

Tamil Nadu may not be a big market for the Hindi film industry but “it still accounts for less than 10 percent of Hindi box office films,” said Puri. And, now the state’s film industry is dealing with local body taxes that many states were fearing post GST rollout.

Greater Chennai Corporation’s Revenue Department has asked the industry to levy the entertainment tax on new and old Tamil movies at 10 percent and 7 percent, respectively. The new films in non-local languages will have to pay a 20 percent tax and the old ones will be charged a 14 percent tax.

The film council is claiming that the 10 percent tax levy is an extra burden on them. Adding to this Puri said, “GST is supposed to be the only taxation on goods and services. Why should films face the burden of additional taxes? As it is, the tax burden of 28 percent is excessive in my opinion, why should it further rise on films and affect the business?”

Earlier, Moneycontrol had reported that states like Maharashtra, Gujarat, Madhya Pradesh and Rajasthan have indicated they could ask local bodies to charge a tax on cinemas. And, Puri says, “It’s a worrying possibility which the exhibition business and the whole industry needs to guard against.”