After the huge protests by the local film industries including Kannada, Tamil, Telugu, Malayalam and others, the Union Government led GST Council has decided to reduce the tax on film tickets. Earlier the Entertainment Tax was replaced with a GST of 28 %. This was opposed by many including KFCC and the Kannada film industry as a whole. Kannada films enjoy tax exemption till now. Even other industries like Tamil and Telugu protested. Even those films enjoy tax rebates in their respective states. The GST council has today announced that the tax will be reduced from 28 % to 18 %. But there is a catch. The reduction in tax is only for tickets below Rs 100.
This will divide the tax between multiplexes and single screens. Almost all multiplexes in Karnataka have ticket prices less than Rs 100. Almost all multiplex tickets are priced above Rs 100. Therefore on the ground the tax in multiplexes will be 28 percent and tax in single screen will be 18 per cent.
But all Kannada films which have zero tax now will pay either 18 % or 28 %. Industry sources say that they had sought a tax of only 5%. But it came as a shock when it was placed at 28%. Even at 18 % that is announced today, industry people are not happy. Smaller theaters will be the worst affected with the tax and Kannada films in particular. For example if a theatre collects Rs 5,000 in a show, Rs 1,800 will go as GST. The remaining Rs 3,200 will have to be shared between the theater, distributor and producer. Many small theaters have collections that are even less. They are surviving on Kannada films as there is no tax. These theaters will shut down.
Another aspect is the burden on audience. Theatres and producers will not absorb the 28% tax. It will be passed on to the audience. As was seen when the ticket prices was capped at Rs 200, theaters will shift the burden to audience. Rs 200 tickets were priced at Rs 264 adding tax to it. The same will happen with GST also. The audience will however know for sure how much tax they are paying for watching movies.