CHENNAI: The much bandied-about sop given by the previous DMK regime to the film fraternity – the entertainment tax waiver for films with Tamil titles – seems to be on its way out under the new government, though no official order has been issued.
For nearly two months, no Tamil film has been ordered this exemption by the Commercial Taxes department, which looks into this issue. Entertainment Tax for a feature film, charged on the theatres, was 25 per cent in the previous AIADMK regime of 2001-2006 and was later reduced to 15 per cent.
In July 2006, a month after the DMK assumed power, it waived off the entire tax amount with one condition: the film should have a title in Tamil. This led to several changes in titles in order to avail of the discount, like ‘Something Something’, whose title was changed to ‘Unakkum Enakkum’, and Rajini’s ‘Robot’ which was later renamed ‘Enthiran’.
As part of the procedure to avail of the exemption, a film producer had to submit a letter to the Tamil Film Producers’ Council stating why the title suits the film and why it is eligible for tax exemption. A title committee of the Council would review this document along with the film’s certification from the Central Board for Film Certification, and would submit the same to the Commercial Taxes Department. A committee within the Tax department then reviews the title and sends in its written decision, which is forwarded to all the theatres that the film will be screened in.
By this, producers and distributors who sell the film to theatres share grater revenue from the theatres once the film is released as theatres do not incur this extra tax cost. This sop approximately cost the exchequer a loss of Rs 50 crore annually.
Since May 10, however, no Tamil film seems to have received the letter of confirmation from the Commercial Taxes Department. This has led to a 15 per cent higher cost charged by theatres as their screening rates in order to pay the tax. With poor clarity on whether the film will qualify for the waiver or not, theatre owners are also being forced to cough up the tax amount. The last film to have received such an exemption letter was ‘Paasakkara Nanbargal’, which released on May 30.
Kannappan, secretary of the Chengalpet Theatre Owners Association, said the last popular film to have received such a waiver was ‘Ko’, which released in April. “There is still so much confusion over whether the system will be revived. Some producers or distributors pay us extra while for some films like ‘Ethan’, theatre owners have been paying the tax amount with their share of revenue,” he said.
Speaking to City Express, an official in the Commercial Taxes department said no recent films were being given the tax exemption, as the committee that reviews the films has not met recently. Meanwhile, the film industry is abuzz with rumours that the new government may choose to extend this tax waiver only for small films, released in less than 25 centres, while the bigger producers and distributors could be asked to pay up the tax.
It may be recalled that this system of progressive taxation had been proposed by the Tamil Film Producers Council too, in its Annual General Body Meeting in January 2011.