Ticket prices set to rise as GST turns villain for Malayalam film industry

The Central Goods and Services Tax (GST) Act 2017 came into force today. It is after a protracted effort and continuous dialogue with the Opposition and other state governments that the Union government was able to enact the same.

The aim of the GST is to bring a uniform tax scheme for the whole country. While several sectors like trade, service and industry are happy with the new Act, it seems the Malayalam film industry refuses to share their exuberance and has its own reservations about it.

The Kerala film industry has an annual turnover of Rs 500 crore and provides employment to around 60,000 people. GST proposes a 28 per cent tax for movie tickets. This will result an increase in ticket prices, which will in turn discourage people from coming to theatres, affecting the livelihood of thousands.

As things stand, movie tickets prices in Kerala include a 10 per cent entertainment tax in panchayats, 20 per cent in municipalities and 25 per cent in corporations. Apart from this, a service tax of Rs 5 and cess of Rs 3 are also levied.

As GST doesn't interfere in the tax collected by local bodies, the entertainment tax collected by local bodies remain the same. The local bodies are unlikely to forgo any part of the entertainment tax as it is their main source of income and used to pay salaries to their employees.

Addressing the initial concerns of the film industry, the Union finance minister Arun Jaitley had announced a revised GST rate on June 11. According to it, movie tickets up to Rs 100 invite an 18 per cent tax, while tickets above Rs 100 are charged 28 per cent. But as a result of this, ticket prices of several theatres and multiplexes, which are already high, will increase further.

Malayalam film industry is already facing the threat of piracy on a massive scale. Now, the increased ticket prices due to GST might mean more people will avoid watching films in theatres and resort to torrent downloads and buying pirated movie discs.

It is in this backdrop that film producers and exhibitors met Kerala finance minister Dr Thomas Issac earlier this month. He assured them that on implementing GST, the local bodies will be directed not to collect entertainment tax on cinema tickets and that any loss suffered by the local bodies will be compensated by the state government. However, it is understood that organisations associated with the film industry have decided to increase ticket rates to make up the loss said to be suffered by the industry.

The apprehension of the film industry towards the implementation of GST is reflected in the fall in the share price of multiplex operators.

• GST
• Malayalam film industry