Kerala minister promises to spare cinemas from entertainment tax

State government has decided to do away with entertainment tax for cinema The industry is paying 25% Entertainment Tax to local bodies The GST tax rate will be fixed at the GST Council meeting on June 11

Putting an end to the apprehensions of the film industry, Kerala Finance Minister said the government has decided to do away with dual tax for cinema, once the Goods and Services Tax (GST) regime comes into force. He announced the decision at a meeting with the representatives of the film industry.

The film fraternity was under the apprehension that they would have to pay an additional 28% tax in addition to 25% entertainment tax, which is being levied by local bodies. This would lead to double taxation resulting in an increase in the ticket cost which would, in turn, affect box office collections. 

AMMA general body members Innocent, and Dileep shared the concern with a meeting with the minister, and he replied that the state government would do away with entertainment tax for cinema. The government would compensate the loss incurred by local bodies in this regard. The collection of GST and entertainment tax would amount to double taxation.

The tax rate to be levied from cinemas will be fixed at the GST Council meeting on June 11, he said. 

Cinema industry, with an annual turnover of over ₹500 crore, provides direct and indirect jobs to over 50, 000 persons. An average of ₹4 crore is spent by Malayalam industry to produce as many as 130 films a year. 

Kerala has 550 theatres, and average turnout per show is 400 persons bring a daily revenue of over ₹2 lakh per day. The surge in production cost and the threat from pirated videos are already eating into the returns of producers. A steep hike in ticket price will affect the flow of cinemagoers, and younger ones are more likely to seek other options like pirated videos.