Film producers in Tamil Nadu have appealed to the Finance Ministry to reduce the Tax Deduction at Source (TDS) for films, stating that over 120 films with investments of over Rs 1,000 crore were stuck in Tamil film industry alone and unable to be released in theatres due to the COVID-19 induced lockdown. According to the Tamil Film Active Producers' Association, the imposition of 10 per cent TDS on distribution of cinematographic films, has come a 'big shock' and would impact lakhs of people associated with the film industry.

In a letter to Finance Minister Nirmala Sitharaman, CII Media and Entertainment (South) T G Thyagarajan said when Indian film industry was facing a decline by close to 60 per cent, it requires the Ministry's support to revive post the pandemic.

"Any drastic change in the tax rates like TDS at 10 per cent shall lead to closure of the film industry..which will impact lakhs of people associated with the industry," Thyagarajan, also the treasurer of Tamil Film Active Producers Association, said.

Noting that the TDS on royalties related to cinematographic films till March 2020 was at two per cent and was later reduced to 1.5 per cent during the pandemic, he said, "the sudden imposition of 10 per cent TDS for FY 2021-22 will become a big burden to the producers who are already under heavy losses." The industry slowly started reviving from January 2021 and before it could begin running on its feet, the second lockdown imposed by various state governments severely impacted the film industry, he said.

"Today hundreds of films are stuck, unable to be released in theatres and recover their investment," he said.

He pointed out that a study conducted by trade body Federation of Indian Chambers of Commerce and Industry (FICCI) and consultancy firm Ernst and Young, released in March 2021, said the 'film entertainment segment' declined by 40 per cent to Rs 7,200 crore in 2020 from Rs 11,900 crore in 2019.

"With the ongoing outbreak, it (turnover) may further decline by another 25 per cent and touch a level of around Rs 5,000 crore turnover, meaning the industry declined by 60 per cent in the last two years," he said.

"On behalf of TFAPA, we appeal to you to reconsider the decision to impose 10 per cent TDS on royalties relating to Cinematographic films and restore at the same level of two per cent until the film industry revives," he said in the letter.