The Indian film industry has united for this cause after several rounds of discussions on it failed to make any headway. The government announced the 10.3 per cent service tax last October, increasing the industry’s tax burden. According to producer and V-P of the film producers’ guild in Mumbai, Mukesh Bhatt, more than 50 per cent of a film’s budget comprises various taxes, such as excise, stamp duty, VAT, Octroi and so on. “This will further shoot up a film’s budget, reducing the chances of its success when released,” he points out.
It’s the cinema-goers who would finally bear the brunt of this government move when the ticket prices go up in order to offset the service tax that the distributors and exhibitors will pay at their end. “We are already paying huge taxes on the lease with the mall owners. A further 10.3 per cent tax will have a trickle-down effect, even for single screens, thus hiking the ticket prices and possibly hampering the ticket sales,” explains Sunil Punjabi, CEO, Cinemax India Ltd. He adds that theatres have started paying the taxes since October 2011 when the order was passed.
The film industry is one of the highest revenue-generating sectors in the country even though no more than 10 per cent films succeed at the box-office annually. In such a scenario, the worst-hit, apart from the audience, will be the small-budget and the indie filmmakers. “This is going to deter the new talent from entering the industry,” says Bhatt.
While the film industry has to constantly compete with the television or internet, neither of them is charged service tax.
Even though every Indian film federation has agreed to cooperate, some filmmakers feel that a strike will add to the industry’s losses and may not be the best way to make their point heard. “We are only hurting ourselves this way,” says a filmmaker, who did not wish to be named. “We need to strategise and settle various issues between ourselves before resorting to strikes.”
Bhatt and Aggarwal, however, feel that this is the final step that the industry could take since all talks with the Information & Broadcast and Finance ministries have failed. “We are not reckless. The date of the strike has been chosen in a lean business period. Besides, business is least affected on a Thursday since the new films release the next day. So that week’s release, Ekk Deewana Tha, is not likely to be hit badly by it.”