The Goods and Services Tax (GST) has come as a bane to Kannada cinema. While Kannada films were exempted from entertainment tax before, the GST will now levy same taxes on films from all languages including Kannada.

Currently, Kannada films are exempted from entertainment tax while a 30 per cent entertainment tax and an additional 15 per cent service tax is levied on other language films. The news GST rates will now have films of all languages taxed at 28 per cent. 

According to a report by Deloitte, India is the fifth largest media and entertainment market in the world and is rapidly growing. However, a local film industry like Sandalwood has had stiff competition from films of other languages.

"In a city like Bengaluru, other-language films, including Hindi, Tamil, Telugu and Hollywood movies have been all along enjoying a good market, and Kannada films have been put to tough competition. Now, the GST will deal a death blow to Kannada films as they have to suffer the same amount of tax as other language movies," said Vivek Mallya, a chartered accountant, who is advising the Karnataka Film Chambers of Commerce (KFCC) on GST.

A meeting will be held today, May 22, by Karnataka Film Chamber of Commerce, Karnataka Film Producers Association, several actors from the industry and other players to formulate a plan to tackle the tax that has the potential to the Sandalwood film industry.

The only ray of hope seems to be the state component of the tax. The 28 per cent entertainment tax has been divided into 14 per cent State Goods and Service Tax and 14 per cent Central Goods and Service Tax with the state given the freedom to choose the rate that they want to impose. 

The state government has the option of either not imposing the tax, or to reimburse the tax collected. And since the tax will be passed on to moviegoers in the form of increased ticket prices, this move will keep the prices in check.