Regional-movie industries and single-screens across the country are set to suffer at the cost of big-budgeted Bollywood productions and multiplexes in the goods and services tax (GST) regime.
Production costs of smaller regional movies are set to go up as GST is now being accounted for when payments are done to hundreds of vendors, most of whom worked earlier on cash, says a movie director.
"A large portion of the movie-making ecosystem was in the informal cash-based economy like those providing equipment or catering services. Financial dealing with them under GST would mean a jump in our production budgets. It's difficult to ask the channels or movie producers for more money. So, we have to adjust by cutting down costs, which, as it is now for regional movies are already at modest levels compared with Bollywood. It's a blow to us," television and movie director Arka Ganguly told DNA Money.
Single screens, too, have suffered. Kolkata's most prominent single screen outfit, Priya Cinema, had to cancel Saturday shows to make tickets GST-compliant, says the owner of the movie theatre.
So far, the states having a thriving regional film industry have had their own stake in the business as it is a source of revenues, with some of them even providing support in form of subsidies. And some of these steps are not compatible with the new indirect tax regime.
Tamil Nadu imposes a 30% municipal tax to squeeze revenues out of a money-making business while the West Bengal government provides subsidies with an intention to help local movie industry stand against hits like Bahubali from South or Dangal from Bollywood.
The Tamil film industry has even gone on strike demanding the removal of 30% local body tax in urban areas.
In Bengal, exhibitors and hall owners have been grappling with how to account for the state subsidy in GST-compliant tickets.
"We have upgraded the software by Sunday morning as there were issues about how to treat the rebate that the state provides us for showing Bengali movies," said Arijit Dutta, owner of Priya Cinema, who is still counting his Saturday losses.
Even as such initial teething problems are being sorted out, GST has made buying tickets online a costly affair with a hike in service charges revised from 15% to 18% for buying tickets via online platforms like BookMyShow.
"The ratio of online sales to physical sales of tickets has been 35:65 for local movies. We expect the share of online sales to fall further from now on as most the viewers of local movies are price-sensitive," said Ganguly.
To buy two tickets for a Sunday show of Rs 180 each, probably the lowest rate one can get during the weekend, one has to shell out Rs 59 for 'internet handling charges'.
Priya's Dutta is optimistic though.
"Those who buy tickets online can afford such extra charges. Let's wait to see the impact."