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How will Tollywood survive GST?

The introduction of GST is impacting the movie collections, particularly in Nizam, Visakhapatnam, Nellore and Krishna which embrace the multiplex culture in a big way.

Published: 01st August 2017 08:28 AM  |   Last Updated: 01st August 2017 08:28 AM   |  A+A-

Express News Service

The introduction of GST is impacting the movie collections, particularly in Nizam, Visakhapatnam, Nellore and Krishna which embrace the multiplex culture in a big way. The loss in these regions stands at around 13-14 percent

Entertainment has become a part and parcel of our lives. After a hectic week at work, most of us rely heavily on cinema viewing, a practice which grew into an obsession over the years.

But, the cinematic experience is likely to cost you more as the distributors and the exhibitors are now demanding an increase in ticket prices due to the implementation of Goods and Services Tax (GST).

With the new taxation system, the box office collections of films have greatly suffered in the last 20 days as the tickets priced `100 and below were brought under the 18 percent slab, while those priced over 100 will continue to fall in the 28 percent slab.

The introduction of GST is impacting the collections, particularly in Nizam, Visakhapatnam, Nellore and Krishna which embrace the multiplex culture in a big way. The loss in these regions stands at around 13-14%. In places like Guntur, East, West and Ceded, where the single-screen culture is still predominant, the losses witnessed are around 10 percent. While the remaining centres have suffered around 8 percent loss, regardless of the films low production costs.

Sample this.

Nani-starrer Ninnu Kori was the first major release after the new taxation system came into existence. Although the film opened to unanimously positive reviews and good word-of-mouth, it struggled to attract public to theatres, especially in B and C centres. The film eventually failed to surpass the lifetime collections of Nani’s previous hit Nenu Local.

An action entertainer like Patel SIR was also unable to bring any joy to its filmmakers as the film’s collections were hit badly. Similarly, Shamanthakamani, which garnered largely positive reviews, is finding it difficult to draw the audience to the theaters. Producer Dil Raju says a lower tax rate would have made watching films affordable to all.

“Classifying movie watching into two slabs is unfair. Either way, the final recovery for the distributor and exhibitor would be lower than it was earlier. With the new system, the multiplexes have to cough up an additional 13 percent, while the tax policy in standalone screens is spiked by 18 percent.”

This tax system is also imposing a lot of hardship on film business as the distributors and exhibitors are less than enthused to acquire a project. “The makers of the upcoming releases like Jai Lava Kusa, SPYder and Paisa Vasool are finding it challenging to close the business. If this is the situation of biggies, imagine the plight of small films,” wonders a veteran distributor-producer.

This concern seems to be causing many to take sides. “The pre-release business is used as collateral to finance a film. If this culture takes a beating, the banks won’t loan and the films find it hard to get off the ground,” the veteran adds.

Dil Raju maintains that the Telugu Film Producers Council (TFPC) is lobbying for a tax waiver or rooting for a uniform standard rate for multiplexes and single-screens.

“Unlike Tamil Nadu, we are affording the tax burden as the GST had been added on to the ticket. As a result, we are losing the revenue by 10 percent. Hence, we are pitching for a waiver in State share or seeking a lower tax rate. If these proposals fail, we will ask the Telangana and Andhra Pradesh governments to exclude GST from the ticket price,” explains Raju hinting a possible hike in ticket prices.

K Deepak, an exhibitor from Ceded and Karnataka, asserts that the Southern film industry has been a major source of revenue for the government for decades. But it hardly received any subsidies or exemptions from the government.

“While Bollywood is benefitted by around 7 percent through GST, regional films are still at a major loss. As for the Telugu States, the GST has made audience wary of shelling out money on films and eventually, the theaters are witnessing a considerable drop in footfalls.”

He foresees a suicidal situation with the new tax regime. “The single-screen theaters are finding it difficult to make profits. There’s already a slowdown in business due to piracy and ubiquitous presence of multiplexes. And this tax system is threatening us to shut shop,” discourses Deepak.



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