India is among the few countries with a federal structure and a GST regime. Multiple rates structure are a key problem, added to which is that local bodies can also impose taxes on top of GST, as we see in Tamil Nadu’s cinemas. The desire to tax items seen as luxuries, plus many exemptions that come with all Indian rules and regulations, leads to complications that may take time to set right. Despite problems, though, GST may be a step in the right direction even if it doesn’t strictly adhere to the “One Nation, One Tax” principle. However, conflicts are yet to be resolved on several services that aren’t yet on the GST bandwagon.
Cinema in Tamil Nadu is more than an entertainment and leisure sector. Making, displaying and viewing films have a substantial political colour. Where the industry and exhibitors feel the heartache most is dual taxation of 28 per cent GST on tickets above Rs 100, plus 30 per cent municipal and local body tax. A 58 per cent tax on movie tickets is prohibitive. But then the state had exempted Tamil films from entertainment tax, leading to a sham in which conversion of black money into white was perfected by some people. GST plus local entertainment levy on cinema is, however, excessive, and affects ordinary citizens too. This indirect tax policy is far from perfect, and the Centre and states must agree to modify their positions to make it fair and equitable. All the southern states have agreed not to slap taxes over and above GST on cinema. Tamil Nadu is just being greedy.
