Chennai multiplexes strike against double taxation in Tamil Nadu

Multiplexes in Chennai went on strike on October 3 to protest against the levying of an additional tax over and above the Goods and Services Tax (GST). The strike comes at a time when some big ticket movies are set to be released for the festive season. The Tamil Nadu Film Producers Council (TFPC) has also decided not to release films until the state government removes the 10 per cent entertainment tax and regulates the ticket prices.

This step is in response to a notification issued by the Greater Chennai Corporation (GCC), levying a Local Body Entertainment Tax (LBET) of 20 per cent on non-Tamil films, and 10 per cent on Tamil films, with effect from September 27, 2017, in addition to the 28 per cent GST on cinema tickets.

Under the erstwhile indirect taxes regime, state governments were levying an entertainment tax on exhibition of films in cinema theatres and multiplexes. With the advent of GST, entertainment tax levied by the state was subsumed in GST, and hence, the governments have stopped charging entertainment tax on cinema tickets, since these were subject to GST.

However, Tamil Nadu has empowered local bodies within the state to start levying entertainment tax, in addition to GST, and in pursuance thereof, the Greater Chennai Corporation has notified that it will start levying a 20 per cent entertainment tax on non-Tamil films and a 10 per cent entertainment tax on Tamil films, in addition to the 28 per cent GST being levied on cinema tickets being sold within Chennai.

Deepak Asher, President, Multiplex Association of India said that the Association believes that this levy of LBET by Chennai Corporation leads to double taxation on an industry, which is already reeling under the impact of high tax rates and piracy. It could well sound the death knell of the film industry. Therefore, LBET should be rolled back immediately.

LBET significantly increases the tax cost for cinema exhibition and hence is inflationary. It goes against the principle of “One Nation, One Tax” and frustrates the GST model, and leads to the same problems that have plagued the industry so far – a multiplicity of very high tax incidences.

All multiplexes that are members of the Multiplex Association of India have shut down. This includes 5 multiplexes and 27 screens across the two largest players in the industry – PVR and INOX. The estimated loss per multiplex property for a day’s closure could amount to Rs 6 lakh per day.