While the trade, industry, and service sectors are eagerly looking forward to the rollout of the Goods and Service Tax (GST) regime, the Malayalam film industry refuses to share the ebullience and seems apprehensive about its outcome.

The industry, with an approximate annual turnover of about ?500 crore and provides 50,000 direct and indirect jobs, foresees the imposition of 18% service tax . This is feared to force an increase in ticket costs and a resultant drop in viewer turnout in cinemas. The industry that churns out about 130 films a year spends an average ?4 crore per production.

From a cinema ticket that costs ?100, the government is levying 25% entertainment tax and also ?3 as cess to fund the initiatives of Kerala State Artists and Cultural Workers Welfare Fund Board, including pension, health insurance, and marriage assistance to the kin of its subscribers.

Entertainment tax

Entertainment tax being the main source of revenue for local self-government institutions, the government would not review it on any count.

If the government decides to levy 18% service tax, the total tax component per ticket will go up to 43% and the key players of the industry have no option but to pass on the burden to the viewers by increasing the ticket cost.

The State has 550 cinemas and the average viewer turnout per show has been pegged at 400 and the per day viewership, at two lakh. Industry sources say pirated videos and surge in production cost are already eating into their returns and a steep increase in ticket cost will prompt cinegoers, especially the younger ones, to seek other options, mainly videos.

The unrestricted release of multilingual stunners such as Yenthiran, Bahubali in the State are reported to be eroding the profit of Malayalam film industry that hinges primarily on the Kerala market and also overseas stations that have a Keralite presence.

A significant dip in the number of viewers in theatres owing to ticket cost revision is feared to have a debilitating impact on the industry. Kerala Film Producers’ Association president G. Suresh Kumar expects the government to assume a proactive role to help the industry tide over the crisis that is in the waiting.

"Daily collection has improved considerably following the introduction of e-ticketing in cinema houses. The new ticketing system has plugged the revenue drain at various points in the producer-distributor-exhibitor network. Which means that the revenue of local bodies from this source has also gone up. It is time the government revisited the entertainment tax structure and made a meaningful intervention to save the industry from an impending collapse," Mr. Suresh says.