Good and Service Tax bill is a great progress for a rising economy like India but several recommendations of the bill seem to be shaking the movie industries of India. Especially, Regional cinema could see an entire paradigm shift with new movies losing out on any kind of hopes of entertainment tax exemption and also hopes on recovery off the money with increase in taxes.
In Telugu states, the entertainment tax has been restricted to 15% and 12%, respectively. As film industry, requested the government officials of both the states to keep the ever increasing ticket rates in check with slab system, the entertainment tax has been decided to be imposed on a lower side so that the industry can benefit. Many small producers start their productions by calculating the return on their investment in regards to the sources of income and taxes to be paid. With GST increasing the tax rate to 28% in both the states, the margin of profits for distributors, exhibitors and producers will decrease considerably. Not many distributors will show interest in paying heavy advances as the rise in ticket rates is inenvitable.
Even the big movies will perform poorly with such increased rates as families will show even less interest in spending their time at a theatre mainly single theatres that guarantee better income for the distributors and exhibitors. Small and medium cinema will have to spend more on marketing and strategists to cut their promotional videos as interesting as possible to create buzz. The number of productions will reduce considerably as already in a 10% success rate industry this hike in tax is another irrecoverable blow. Well, either piracy or online content will see major boost and theatrical business might once again see great decline. Only interesting content and big gambles like Baahubali can help survive the situation as it is today.
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