Around 1,100 cinema halls and multiplexes across Tamil Nadu stopped screening films on Monday with distributors and theatre owners going on an indefinite strike against an additional 30% tax over and above the newly implemented GST. It subsumed entertainment tax as well, so the Tamil Nadu government rechristened it as corporation tax, asking cinema owners to pay up.
Industry heavyweights met with the state's chief minister late Monday, but discussions reached an impasse, and theaters announced they would keep their doors closed until the next meeting with Tamil Nadu's government.
The Goods and Services Tax came into effect from 1 July.
The new tax regime, the biggest economic reform since Independence, levies a 18 percent tax on tickets up to Rs 100 while tickets priced more than Rs 100 fall under the 28 percent bracket. On Saturday that is on July 1st, Tamil Nadu film community along with the South Indian industries, sent a notification to the Central Government, requesting to put the regional cinemas in the "least slab". This is in addition to the GST rates.
"We expect Govt of TN to remove the local tax and address the concerns of the theatre owners so that the film continues", two-time National award-winning writer and film producer, Dhananjayan Govind, said. But industry experts say that the actual tax incidence works out to be more expensive. He feels something have to be done to producers who had released their films last Friday. "The problem is with the 30% entertainment tax already being slapped by the local bodies, which takes the cumulative tax to 58%". "We welcome it", Tamil Nadu Theatre Owners and Distributors Association president Abhirami Ramanathan said. This will imply curtains in theaters for almost 10 movies released two weeks back at least for now.
"It's simple, we are only the collecting point, the money only goes further into the industry which at this rate of taxation, will collapse", Ramanathan said. "They can not afford to pay this kind of tax", he had said.
The GST subsumes the entertainment tax unless it is levied by local bodies.
Reacting on the double taxation by the state, Haasan said in a statement: "Filmmaking has been made hard deliberately".