Tamil Nadu theatre owners go on strike over double whammy of entertainment tax + GST

More than a thousand cinema houses remained shut in Tamil Nadu Monday as exhibitors went on an indefinite strike to protest the double whammy they have been slammed with:

– A hefty 30% Entertainment Tax

– Plus a Goods and Services Tax (GST) of 18-28%, depending on the ticket price

Theatres will not be able to sustain a total tax of 58%, said Tamil Nadu Theatre Owners and Distributors Association President.

Monday's strike was not so much against  GST as it is against the 30% Entertainment Tax slapped through a government order (GO).

GST on cinema has two slabs –

– 18% for tickets under Rs 100

– 28% for the rest

“The theatres have to pay a 30% tax to the local body. This is in addition to the GST rates. And on each local body tax, we have to pay an additional 8% GST. So the total tax rate is 66% in Tamil Nadu. For a Rs 100 ticket, we will be paying almost Rs 66 as tax, which is not viable,” Ramanathan said.

As the entertainment tax levied by local bodies will not be subsumed by the GST.

He said the government “surreptitiously issued the GO on Friday evening to prevent us from going to court”, and said he has sought the withdrawal of the 30% Entertainment Tax. He pointed out that Kerala had withdrawn the local body tax.

The GST subsumes the entertainment tax unless it is levied by local bodies. Taking advantage of this, the state government empowered local bodies to levy entertainment tax. It replaced the Tamil Nadu Entertainment Tax of 1939 with the new Tamil Nadu Local Bodies Entertainment Tax of 2017 from this month. The tax rate remained unchanged at 30%.

“The companies which were earlier paying tax to the commercial taxes department will start paying it to the respective local bodies from 1 July,” a senior Greater Chennai Corporation official said.

Until the GST came into effect from 1 July, the entertainment tax was 30% in big cities such as Chennai and 20% for the rest of the state.

Vishal, president of Tamil Nadu's Film Producers Council, said that the GST will greatly impact the film industry because it has put regional cinema and Hollywood movies in the same highest slab of 28%.

The South Indian film industry had requested the Centre to put regional cinema in the lowest slab, non-regional films in the next slab and foreign language films in the highest slab so that the tax does not affect viewership.

A team comprising of Vishal, representatives of theatre owners association and others met Chief Minister Edappadi K Palaniswami at the Secretariat in Chennai to press for the revocation of the 30% entertainment tax.

Tamil film mega star Kamal Hassan has said the 28% GST on the entertainment industry will kill regional cinema.

"Regional cinema is the strength of the Indian cinema and diversity must be maintained in India," he has said and added that the tax on regional cinema be revised to 12 to 15% instead.