Despite Mumbai being the capital of the film industry and Maharashtra promoting its ‘ease of doing business’ policy, the multiplex industry in the state is dying due to heavy entertainment taxes, among others. The Multiplex Association of India (MAI) has demanded that the government reduce the entertainment tax and eliminate additional charges that are levied on online ticket booking.
The multiplex boom in India was started by the path breaking ‘Multiplex Policy’ announced by the Maharashtra government in 2001, which led to the revival of the ailing film exhibition industry.
Lauding this policy, Deepak Ashar, president of MAI said, as a result of the policy, around Rs1,500 crore had been invested in more than 130 multiplexes in the state with more than 500 screens, which comprise around 25 per cent of the multiplex screens in the country.
However, Mr Ashar added that heavy taxation was killing the multiplex industry, which is up to its neck in losses. “On the one hand, the state government is removing hurdles and simplifying rules under the ‘ease of doing business’ policy, but on the other, it is tightening entertainment industry,” said Mr Ashar.
He said that entertainment tax levied in Maharashtra is 45 per cent, one of the highest in the country. “Most manufacturing industries pay 16 per cent excise duty plus around 4 per cent VAT. The service sector pays 15 per cent service tax. Even the Goods and Services Tax is expected to be around 18 per cent. In such a scenario, there is no reason why multiplexes should pay tax that is as high as 40 per cent to 45 per cent, Mr Ashar said.
There will not be any significant impact on state revenue, since entertainment tax contributes to less than 0.5 per cent of it. Hence, any reduction in it would be immaterial, he added.
Elaborating on the expenses multiplexes have to incur, Mr Ashar said, “We have to levy an extra '10 per ticket from customers who book tickets online. We have provided this facility for the comfort of customers, who use the internet at home. We have made huge investment in terms of IT infrastructure, servers and leased line bookings. Sometimes we use the service of outsourced aggregators like BookMyShow.”
The MAI president said a meeting was held with finance minister Sudhir Mungantiwar where the latter was requested to reduce taxes to boost the industry. “We hope some issues will be sorted out in the next meeting with Mr Mungantiwar,” Mr Ashar said.
Speaking about the interaction with the multiplex association members, Mr Mungantiwar said, “I told them if the state were to reduce the tax, would they reduce the cost of tickets They should do this. Multiplexes charge heavy rates on mineral water bottles and edibles. They should at least provide water free of cost,” said the minister. “We have not taken any decision about tax exemption so far,” he added.
