Over 1,000 Indian cinemas shut to protest double entertainment tax

CHENNAI - More than 1,000 cinemas in the southern state of Tamil Nadu have closed in protest against the imposition of 30 per cent of entertainment tax in addition to 28 per cent GST (Goods and Services tax).

Under the new GST regime, the movie industry will have to pay 58 per cent tax that will also increase the rate of the tickets for the audience.

Movie theatres in the southern state darkened their screens from Monday, saying the new nationwide tax introduced in India's biggest-ever fiscal reform will deter cinema-goers and encourage piracy.

It intends to replace more than a dozen national and state levies with a single unified tax code.

But as part of negotiations to get states to accept the GST, the government agreed some could impose additional local levies. Tamil Nadu has targeted cinema tickets.

Abirami Ramanathan, president of Tamil Film Chamber of Commerce, told the media that all shows will be cancelled from July 3. He said the state government had earlier notified that municipalities would not levy tax on top of GST, the Indian Express reported on Tuesday.

"The tax rate on tickets is 58 percent, the highest in the country," Ramanathan added. "It is a burden on movie-goers and defeats the objective of the new tax regime.”

The association accepts the new GST but says cinemas cannot afford the state duty as well.

The Tamil film industry is India's second biggest after Mumbai-based Bollywood, and the state accounts for a huge chunk of the $2.1 billion annual box office earnings across the country.

Tamil film industry representatives say the taxes could affect the livelihoods of nearly one million people.