Representative Photo
Representative Photo

Kerala introduces 10% local body tax on movie tickets

  • Majority of the 400 screens in Kerala, comprise single-screen theatres
  • Cinema had remained part of the highest tax slab

NEW DELHI : Movie tickets are all set to cost more in Kerala as the state government proposed to levy a 10% local body tax in addition to the GST (Goods and Services Tax) rate already in place. In December last year, the tax rate for movie tickets above Rs. 100 across the country was brought down to 18% from the 28% fixed by the GST Council in 2017. Cinema had remained part of the highest tax slab, wherein film tickets whose price exceeded Rs. 100 were subject to 28% GST, while those below the rate worked with 18%, resulting in high ticket prices for movie-goers.

"As per the recommendation of the GST Council, the GST rate of cinema tickets was brought down to 18% from 28%. As such, the local bodies will be permitted to levy 10% entertainment tax on cinema tickets," Kerala Finance Minister TM Thomas Issac said, presenting the first budget of the CPI(M)-led LDF government after the devastating floods last year.

Majority of the 400 screens in Kerala, however, comprise single-screen theatres with India’s biggest multiplex chain PVR Cinemas owning only 15 screens.

“Although a regressive move, we view it as an isolated case, and as part of a recovery process from the massive floods the state faced in August 2018," said Kamal Gianchandani, chief executive officer, PVR Pictures Ltd. “We and various other stakeholders are in touch with the state government officials and feel confident that the government will be accommodative and will consider withdrawing the proposed levy."

The unusually high rains that lasted most of August last year saw movie theatres in Kerala shut for eight days, shootings cancelled and technical equipment disrupted. Losses for the movie industry stood somewhere close to Rs. 30 crore with major film releases stalled for a month.

“This is not a welcome move," said PV Sunil, managing director of Carnival Cinemas, that owns 52 screens in the state. “First of all, the purpose of uniform taxation through GST gets defeated. And then additional burden on movie watchers can affect the industry as a whole. For the cause of flood relief, 1% surcharge is already imposed by the government."

Movie viewing is, pretty much, the only entertainment option for most people, Sunil said, prompting the central government to reduce GST rates for movie tickets recently. However, the fear of spread of this move to other states is not entirely unfounded. In October last year, 350 theatres in Madhya Pradesh had shut down to protest the imposition of 15% local tax in addition to the 28% GST, saying that it wasn't just unviable to run exhibition business this way but also defeating the entire purpose of one nation, one tax.

“Imposing 10% additional tax doesn’t seem to be a well-studied decision considering the effect it can have for the whole industry as well as common people’s entertainment possibilities. On the other hand, local bodies will again be empowered to collect tax in advance which we had earlier seen resulting in many unacceptable practices by some of exhibitors. Hence, the Multiplex Association of India is seeking a hearing with the Finance Minister to review this decision," Sunil said.

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