Following the government's announcement to levy 30 per cent of entertainment tax over the GST rate of 28 per cent, the chamber chose to shut down theatres in protest. Tamil Nadu is the only state where an extra percent of entertainment tax is imposed other than GST. After Narendra Modi-led government that the Centre implemented Goods and Services tax from July 1, the distributors and theatre owners have made a decision to protest against the heavy tax rates.
Besides the local tax, a GST of 18 per cent has been fixed for tickets priced below Rs 100 and 28 per cent for those above Rs 100.
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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%.
However, GST will make India one with its conventional procedures and rate taxes.
The indefinite theatre shutdown has proved to be dismal for the films that released this Friday, while casting a shadow over the success of upcoming releases.
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Going to the movies is such an important part of public life in Tamil Nadu that, for many years, the state's political elite have been alumni of its hugely popular film industry. We are not happy with the corporation tax which is 30%. "We hope and pray the TN government gives us the lifeline we so badly need". This would mean that at least 58% of a movie ticket will have to paid as tax. "For a Rs 100 ticket, we will be paying nearly Rs 66 as tax, which is not viable", Ramanathan said. The tax would cripple the film industry, sources said.
Representatives of Tamil Nadu Theatre Owners and Distributors Association (TNTODA), South Indian Film Chamber of Commerce, South Indian Artistes' Association (SIAA), Tamil Film Producers Council and Film Employees Federation of South India (FEFSI) met Palaniswami to discuss the matter.
The reason behind the cancellation of screenings is that there is imposed 30 percent local body tax apart from additional tariffs under the new GST plan. The theatre owners asserted that they are unable to cope with the huge tax burden.
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Actor-filmmaker Kamal Haasan said the industry would speak with "one voice" on the decision. The GST is charged over and aboce the entertainment tax.