GST to deal a big jolt to Tollywood

​Hyderabad: Telugu cinema, which is already reeling under miserable flops and over-budgeting, 28% GST to come into force from July 1 will be like rubbing salt on the industry’s wound.

It puts additional burden on producer, followed by distributors and exhibitors which is bound to send T-town revenues on a tailspin and an estimated loss is Rs 200 crore.

“Producer will be the biggest loser since any form of tax will eat into his or her revenues,” says producer Vallabaneni Ashok, who cites 12% transaction tax and 28% GST against 6.5% to 13% ET will spell doom to producers.

“In fact, producers, exhibitors and distributors met with a GST official a few days ago, but he left us with more doubts,” says producer Mohan Vadlapatla, joint secretary, Telugu Film Producers’ Council.

“Financial losses will be almost double like Rs 200 crore (tentatively) on par with the hike in ET from 6%-13% to 28% besides producer has to pay 18% transaction tax for selling his film to a distributor who in turn has to pay 12% so the impact is compounding.

Our members even met AP Chief Minister N Chandrababu Naidu who assured us that he would write a letter to the Centre since regional films account 1,700 out 2,000 films made every year in India,” adds Mohan.

However, Prassana Kumar, general secretary of Telugu Film Producers’ Council, rues the decision of the Centre to equate gambling and film industry with same tax.

“Cinema is a mix of art and commerce and not just a business proposition, so drawing parallels with gambling is unfair since films also propagate messages and enliven the spirits of poor masses after an hard day’s work,” he laments and adds: “It will sound a death knell to small budget filmmakers and the government need to provide subsidies to save producers from the impending mess.

Actually, 92.5% of ET collected goes to local bodies like panchayats, municipalities and corporations. Now they will mull another kind of tax to buffer their loss,” he adds.

Whereas, exhibitor Srinivas Reddy says: “28% GST along with service tax, maintenance tax and others will add up to almost 50% and may force theatres to shut down, because already theatres are reeling under losses due to spiralling expenses.”

Similarly, a distributor hints of reducing intake of films. “We are caught between devil and the deep sea and we have to cough more to producers, while we don’t get genuine returns from exhibitors.

While additional taxes will further cut into our depleting revenues,” he adds. However, producer Venkat says: “GST is a kind of course correction that would usher in transparency in star, directors’ remunerations and theatre collections, a silver lining indeed.”