Tamil Nadu hikes cinema ticket prices to Rs 150 — what does this mean for upcoming films?

Kollywood is facing a major crisis as Tamil Nadu has become the state with highest taxes on a cinema ticket in India.

Till a few months back, under certain stipulations, there were no taxes on Tamil films. Last week the Tamil Nadu government imposed a 10 % Local Body Entertainment Tax (LBET) for Tamil films in addition to the Goods and Services Tax (GST) on cinema tickets. And if you are watching another language film (English, Hindi, Telugu or Malayalam) in a theatre in Tamil Nadu, the LBET would be 20 %.

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Vishal, actor and president of the powerful Tamil Film Producers Council, stopped six new Tamil films from releasing last Friday, till government withdraws LBET. The Tamil version of Dulquer’s Solo released for a day on Thursday and was withdrawn from Friday. Vishal said to Firstpost, “There will be no new Tamil releases till the state government withdraws LBET. We are fighting double taxation. The film industry is not in a position to pay 38 to 48 % as taxes on a cinema ticket. It will destroy the industry at a time when piracy is at an all time high.”

All the other trade bodies in India welcomed Vishal’s decision and decided to support him, for their own survival.  If the industry takes it lying down in Tamil Nadu, other states in India will follow the double taxation policy.

A spokesperson of Multiples Association Of India (MAI) said: “The LBET by Tamil Nadu government will lead to double taxation, on an industry which is already reeling under the impact of high tax rates and piracy. It could as well sound the death knell of the Tamil film industry. It also goes against the ‘one nation one tax’ policy and makes the very purpose of GST redundant.”

The most powerful theatre association in the country, MAI, shut down their screens in Tamil Nadu from October 3. They are in the forefront protesting against what they call “double taxation” in the state: GST + LBET. The MAI screens in Tamil Nadu include those of the market leader in India - PVR Cinemas, Inox Leisure and Carnival Cinemas.

Tamil Nadu based multiplexes and single screens decided to go ahead with the screening of existing content till their association meets and takes a call on Tuesday (Oct 10).  Hollywood Studios also reacted instantly by not releasing Sony Pictures' big budget Blade Runner 2049, which was scheduled to release on October 6 . The Bollywood producers followed suit by not releasing any new Hindi films last Friday and also withdrew the hit film Judwaa 2, from continuing in its second week.

Meanwhile the Tamil Nadu government, which came under severe criticism on the LBET issue, has swept it under the carpet. They reacted by coming out with the long overdue revised ticket rates for cinema theatres in the state. After a decade Tamil Nadu government revised cinema ticket rates by 25 % over the existing base price. For example, net price of the highest ticket in a Chennai multiplex, Rs 150 from Rs 120; another Rs 42 (at 28%) would be added to the net as GST, making the gross Rs 192 per ticket. The state government wants the theatres to absorb the LBET from their net amount.

A spokesperson of a leading Chennai multiplex said: “There is no clarity on the Tamil Nadu government order on whether the LBET is included in the Rs 150 net amount or in addition to it. The government needs to clarify on this before we accept or reject it.” Vishal and other industry leaders are trying to meet state government officials, asking to remove LBET totally if the industry has to survive.

At the same time there is panic in the industry, which has come to a virtual standstill, as it involves lakhs of people who make a living out of films.

The big question being asked by fans and the trade is whether Vijay’s Diwali release Mersal will hit the screens on October 18. The film won a major title case in the High Court and has been censored with UA certificate. A lot is riding on the big budget Mersal to revive the Tamil film industry desperate for a hit. The producer of the film Murali Ramasamy said: “ As of now Mersal will have a worldwide release on October 18. I can’t miss that date and already tickets are being sold for the premier shows of the film in USA. I really hope by then the matter would be sorted out.”