Kollywood has been in turmoil ever since the Goods and Service Tax (GST) was announced by the Central government. The GST will kick in on the midnight of June 30. The union government replaced the entertainment and service tax with 28% GST on movies. “As of now, 28% GST will be there for tickets above Rs. 100 but for Tamil Nadu it is not an issue because the highest ticket in Tamil Nadu is Rs. 120,” a trade analyst said.
However, there is no clarity from the state government on whether local body taxes will be added to GST. “Like Kerala government, the Tamil Nadu government should come up with a policy that we are not going to charge extra above GST. The government itself is confused about it, the government is divided into three factions and they do not have any time to take a decision on cinema,” he added.
The positive thing about GST is that the content will not be compromised for tax exemption, he said. “Earlier people used to make films by compromising the content because they wanted ‘U’ certificate. Only U certificate films with Tamil subtitles were given tax exemptions. But now, a creative director can do anything with the content which is a big benefit,” said the analyst.
Due to the GST, many of the Tamil movies which have been exempted from taxes are trying to release before July 1, 2017. The Hindu has reported that June will see the release of at least 20 Tamil movies, including some which have been exempted from tax.
Asked about how it will affect the producers of the films, he said, “It is not going to be a boon or a bane for the producer, they just might have to pay double income tax.”
Abirami Ramanathan, President of Tamil Film Chamber of Commerce (TFCC) and owner of Abirami cinemas said, “The GST for tickets above Rs. 100 is 28% and below Rs. 100 is 18%. So let’s say if a ticket costs Rs. 118 after GST, will it stop viewers from coming to theatres? I do not think nowadays Rs. 18 has much of a value, so people will not mind paying that much. But if a family of three is going to watch, it will cost them about Rs. 60 extra, they might prefer to sit at home and watch Netflix or Amazon. If this is the case, then it will affect the film industry, but we can only find out with trial and error method. We are not sure if it will affect the Tamil film industry as of now.”