28% GST rate is a huge setback for film industry: Guild President Siddharth Roy Kapur

Mumbai: On May 19, Finance Minister, Arun Jaitley said that the GST (Goods and Services Tax) will include present entertainment tax and service tax to replace it with a single 28% tax.

The GST Council on Friday decided a four-slab tax rate for services, and this new regime will roll out from July 1.

Talking about this new tax regime, the President of the Film and Television Producers Guild of India, Siddharth Roy Kapur issued an official statement, stating his dismay over this action.

The statement reads, "The GST rate of 28% announced on cinema tickets is a huge setback for the film industry. The industry had proposed a rate of 5% in our representations to the Government, in order to revive a business that has been struggling from lack of fresh investments in new cinema screens and a significant increase in online piracy. In the existing tax regime, the cinema exhibition sector was exempted from service tax and state VAT, and entertainment tax was the only tax imposed on cinema tickets by states and local bodies.”

"The average entertainment tax collected nationally by the government across all states and languages was in the range of 8-10% of gross box office revenue. Hence logically the GST rate should not have been more than 12%, in order to avoid any exchequer loss. Instead, the Government has equated the film sector with the gambling and betting industries and taxed it at the highest slab of 28%, in addition to which local bodies across states have also been empowered to impose entertainment tax, which was earlier to have been subsumed within GST,” added Siddharth.

He further added, "It is disheartening that the Government does not see the immense contribution that a vibrant "Make In India" film production sector can have in enhancing the soft power of the country. We are one of the only local film industries in the world to have thus far withstood the onslaught of Hollywood.”

Siddharth feels that the Government has always sidelined the entertainment industry and terms it to be in ‘real danger.’

"Unfortunately, with such a lack of interest and support from the Government, the Indian film industry which should be one of the primary forms of cultural outreach from India to the rest of the world, finds itself in real danger of coming undone."