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The regional film industry feels the Entertainment Tax rate at the highest bracket of 28 per cent under GST could kill the industry.
In some States like Karnataka and Tamil Nadu, the tax rate would shoot up to 28 per cent from zero per cent.
“You can’t have the same tax rate for the national film industry and the regional industry. You must have two slab rates. It will be detrimental to fix the local language film at that rate, at least in the home State. This could lead to closure of several theatres and would hit the industry revenues severely,” D Suresh Babu, Managing Director of Suresh Productions, told BusinessLine .
The GST Council has put films in the same category as gambling that attracts the highest rate of 28 per cent. Suresh Babu said the regional film industry representatives have submitted memorandum to Finance Minister Arun Jaitley and Chief Ministers of various States seeking reduction in tax rate.
Small base“The base of regional films is very small unlike Bollywood and international movies. If you put us in the higher bracket, it could kill the industry and exhibition sector in particular,” he said.
On the suggestion that the exhibitors could pass on the tax burden to audience, he said this might work for some blockbuster movies like Baahubali but the audience would turn their back on the regional films if they are charged more tax.
In Andhra Pradesh and Telangana, films attract tax rates of 7 per cent and 14 per cent respectively for small and big films.
“This will go up to 28 per cent at one go. In West Bengal, it will go up to 28 per cent from 2 per cent. It will be a huge burden on the regional industry,” he said.
The aggregate collections from the entertainment tax is only ₹3,000 crore and charging the films at a lower rate would not make a difference for the government, he said.
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