Taxing sin city

It’s a time-worn cliché to draw similarities between gambling and filmmaking. Filmmakers, be it arthouse or commercial, often link filmmaking and betting with life. But watching these films are also looked down upon as a preoccupation. After a century when cinema was born, the form had to make a lot of effort to climb the ladder and attain the position of being called the seventh art.

However, with the new Goods and Services Tax (GST) rules, it seems the policy makers of the country still look at the form through a dogmatised prism. A 28 per cent GST has been levied on cinema and movie festivals, putting it in the same bracket as casinos, race and any sporting event such as IPL.

“It is a sad cliché to draw similarities between gambling and filmmaking, putting recreation and any kind of entertainment in the highest tax bracket,” says film historian S.M.M. Ausaja. However, he suggests there could be a parallel drawn between gambling and movies. “Only 15 per cent of the films released succeed at the box office. And even when a film is ready, there is no saying if it is going to be a hit or a miss. Only in this way it could be a gamble,” he points out, adding, “But for the audience who enters the theatre to watch a film, it is just recreation.”

Interestingly, when it comes to promoting a State program, from Indian tourism, polio eradication or Swachh Bharat, the governments have always taken the help of Bollywood stars. But that doesn’t change the tarnished image of the film industry.

An irate K. Damodara Prasad, secretary of Telugu Film Chamber of Commerce, says, “It is not right that cinema is added into sin tax and put beside it. Cinema is culture; people come to see for some relief and one can’t put it in the same category with the likes of cigarette, liquor, betting and gambling. It is completely wrong and the industry should be given a separate tax as it represents the cultural part of our country.”

Ausaja remarks, “Come to think of it, the whole idea of film production is looked down upon and is not considered a profession. The GST will surely affect film production increasing ticket prices and making film production, expensive. Mumbai is already one of the most expensive cities in the world and just to shoot at Madh Island, one has to get five different permissions.”

Producer and filmmaker, Ramesh Taurani points out there is no clarity on the GST rules as yet. “Considering how there is a 28 per cent tax levied on theatres, I really do hope the state doesn’t levy additional taxes on top of that, because then it’ll become very expensive for both film production and film distribution,” he says.

Regional cinema has more or less enjoyed a tax-free status in most states in India. However, with the rollout of GST, even if the states decide to forgo their 50 per cent share of the 28 per cent tax, regional cinema makers will still need to shell out about 14 per cent to the central government. This could hit regional cinema adversely, concurs Renuka Shahane.“Regional cinema is already suffering and Marathi cinema even more so because we have Bollywood in the same state. So what we do is, we hold our films from releasing when there is a big Salman Khan, Shah Rukh Khan or Aamir Khan-starrer coming up, because it hits the regional sales. And then, once that subsides, we release six or seven films together because they are all queued up. In comparison, the south region flourishes all year round. Taxing Marathi films with GST will be contradictory because the whole reason they are tax-free is to promote the regional cinema in the state,” she says.

Prasad fears that this move could prove to be detrimental to regional cinema. He rues, “Big films are not affected by the new tax system, but the small and medium films will suffer a lot. If you look at the China or France, the local cinema is surviving in a big way because of their respective governments. If you are not supporting the local cinema, Hollywood or Hindi cinema may overtake our films.”

— With inputs from Suresh Kavirayani