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Making The Cut

Slashing GST on movie tickets will benefit patrons and have a positive domino effect on the film industry as a whole

As 2018 drew to a close, we hosted a Round Table interview with the top exhibitors in the industry, where all of them said that the 28-per cent Goods and Services Tax (GST) imposed on the entertainment industry needed to be reduced. The complaint was that GST had driven up ticket prices and was adversely affecting the entertainment business. This complaint was echoed by other representatives from the exhibition and distribution industries too.

On December 18, 2018, noted names from the film fraternity met Prime Minister Narendra Modi, Maharashtra Chief Minister Devendra Fadnavis, Maharashtra Governor C Vidyasagar Rao and other members from the Prime Minister’s Office. After an in-depth meeting, which also discussed how GST was hurting the entertainment industry, this issue was taken into consideration.

The GST Council, chaired by Union Finance Minister Arun Jaitley, at a meeting on December 22, 2018, rationalised the GST on various goods and services, including entertainment. The council slashed the tax from 28 per cent to 18 per cent, for tickets above `100; and from 18 percent to 12 per cent for tickets below `100.

With this news generating a wave of joy in the film industry, we spoke to prominent exhibitors and distributors and asked them to comment on this development and whether the revised rate had affected the only film that was substantially present in theatres after the tax was reduced, Simmba. We also asked them whether they would like the tax to be further reduced. Here’s what they had to say:

Vijay Singh, CEO, Fox Star Studios

The recent action taken by the government to reduce GST from 28 per cent to 18 per cent on cinema tickets is a step in the right direction. The earlier GST slab had adversely impacted footfalls in theatres. This positive change should benefit Tier 2 and Tier 3 markets in particular, as also the overall exhibition business.

Yogesh Raizada, Vice-President, Wave Cinemas

The reduction in GST will result in lower ticket prices, which is good news for the public. But it is still all about content. If a film is poor on content, it will not work even if tickets cost less. If a film is bad, people will not spend even `100 to watch it. On the flip side, if the ticket of a good film is `500, people will still watch it. The main thing is content. If a film has strong content, it will work regardless of ticket prices.

Simmba is in any case running very well. People are still in holiday mode. Many schools have not yet reopened and the weather is pleasant. The reviews of the film are also positive. The impact of reduced GST will be evident only after a few more films release. We have to keep tabs on the next three to six months to gauge the impact, if any. If, at the same time, good films continue to release, it will make for an ideal combination. If a movie is bad, then lowering ticket prices will not help. The big question now is, will occupancy rise? Only time will tell.

Debashish Dey, Distributor, West Bengal

This is definitely a good step for the industry. From a consumer’s point of view, however, if a person wants to watch a film, he or she will watch it irrespective of the reduction in GST. But this measure will definitely lead to better things. I feel that the 28-per cent tax was not an obstacle for the movie-going audience.

I do not think the reduction impacted the collections of Simmba. It was already a huge hit, and it is still doing great business. According to me, an increase or decrease in ticket prices would not have impacted the earnings of Simmba in any way.

Rajesh Thadani, Distributor, Mumbai

It is a positive step and I am sure it will benefit the audience and the entire film industry. With the amount of money Simmba is raking in, we can already see the jump in revenue. It has hugely affected the business of the film in a positive way. I hope that it positively impacts other films also. I am totally in favour of this step.

Sanjay Marudhar, Distributor, CI

It is a very good move. The reduction in tax is always a positive step. It will also affect footfalls. If ticket prices fall, the footfalls will rise. This will definitely help the industry.

Gaurav Gaur, Distributor, Rajasthan

It is a very good initiative. This will result in a fall in ticket prices, which will get more people to theatres. Even though this is a very positive step taken by the government, I think GST for entertainment should be only about 5 per cent.

Slashing the tax has hugely affected the business of Simmba because it is doing exceptionally well in its second week also. People who had not watched the film earlier must have gone to theatres to watch it, which has increased its collections.

Tinku Singh, Group President & CSO, SRS Cinemas

It is a welcome sign. The fall from 28 per cent to 18 per cent, and from 18 per cent to 12 per cent is a substantial drop. This will boost ticket sales and drive up business, which will help us in the long run. Now we will be able to look at a more aggressive expansion plan. It will be easier for us to introduce better technologies. We can also introduce better things with respect to marketing and F&B, among other things.

In some places, there was no tax. But it shot up to 28 per cent eventually. Hence, it became very difficult for an exhibitor to run his business. Now we have received a respite. In a place like Uttar Pradesh, where entertainment tax used to be 60 per cent, it had come down to 28 per cent. That was a good sign. But there were more expansions required in Tier 1, Tier 2, Tier 3 and even Tier 4 cities. But tax benefits always help in business expansion.

The reduction definitely aided the collections of Simmba. Falling ticket prices tend to encourage people to go and watch movies. The reduction in GST has greatly helped Simmba, which is a very good product anyway. We are very happy about the GST cut.

Devang Sampat, Director of India’s Strategic Initiative, Cinepolis

It is a very welcome move from the government. The industry used to be treated very badly and that has now been corrected. We would really like to thank the government for taking this initiative. This basically means that the prices of movie tickets will fall and more people will start watching movies.

This has certainly affected Simmba’s numbers, with footfalls starting to rise the day the reduced tax was implemented. We are expecting to see the same for films like Uri and others that are about to release.

Rajender Jyala, Chief Programming Officer, INOX

This reduction is good for the industry but I think the tax is still too high. Ticket prices have been reduced by 10 per cent and it has impacted Simmba’s numbers.

Satadeep Saha, Exhibitor/Distributor, SSR Cinemas

I think it is very good for customers as well as for producers, distributors and exhibitors. Everyone will reap the benefits of the reduction in GST. Net collections will increase, which will be beneficial for producers. Customers will have to pay less for tickets.

I don’t think that reducing GST has affected the business of Simmba. The film already had the power to do very well at the box office, solely because of the kind of film it is. It is coincidental that it was running at the time when the implementation took place.

Bhuvanesh Mendiratta, Associate Vice-President, Operations and Development, Miraj Cinemas

The GST cut will benefit the entire entertainment industry. The government has already given a boost to the entertainment industry for the next five years. The content of movies is not in our hands. We have had some disappointments in the recent past. This kind of support from the government will sustain our industry. It will give a boost to bottom lines as well. This is a very welcome move for our industry, be it producers, exhibitors or distributors.

This move certainly helped Simmba, whose makers are capitalising on it. They are promoting the film by putting advertisements in newspapers, urging people to watch it at a reduced rate. This is driving up footfalls. I also believe the move will give a huge boost to films like Uri, The Accidental Prime Minister, Cheat India, Manikarnika: The Queen Of Jhansi and others.

Ashutosh Agrawal, Director, Star World Cinemas

It is a very bold step and one that is very good for the cinema industry. Since tickets will become cheaper for customers, more and more people will turn up to watch movies. In the long run, it will help producers and exhibitors too. Maybe after a few days, we will have a greater margin to increase the prices. Lower prices always help people in the business.

Reducing GST has definitely helped the business of Simmba. After the implementation, the collections of the movie increased by 5-10 per cent.

Pushkaraj Chaphalkar, Partner, Citypride

It is a positive move, not just for multiplexes but also for single-screen theatres. Ticket prices will come down and movie-watching will become a little cheaper. If the GST for entertainment is further reduced, it will be better because watching a movie is not a luxury any more; it is a basic entertainment necessity. But the reduction from 28 per cent to 18 per cent is a welcome move.

I do not think it has impacted the business of Simmba. Within its first four days before January 1, the movie was already declared a hit. It has only increased its business a little. We will be able to understand the consequence of this implementation and the change it makes only after a few weeks.

Laxmi Khandeshe, Assistant Manager, K Sera Sera

The impact is definitely going to be good. Movie buffs will benefit most as tickets will become more pocket-friendly. As an exhibitor, I feel these tax benefits will help us and also distributors. Cinema can be a significant instrument of Indian soft power around the world.

Anand Pandit, Producer and Distributor, Anand Pandit Motion Pictures

It is a very welcome step. I welcome this move by the government for looking into this matter, especially since the high GST had become a deterrent to people coming to theatres.

I think a lot of factors worked for Simmba. It has all the right elements for a mass entertainer. But I also believe that the lower ticket rates have had some impact. However, one case study is not enough to gauge the impact it has had because in any case Simmba had all the elements that would attract movie-goers cinema halls.

Rahul Kadbet, VP Programming, Carnival Cinemas

The government’s decision to reduce GST on cinema tickets will make movie-viewing more affordable; it will increase footfalls and overall will aid the growth of the industry. Lower ticket prices would attract more and more people to cinemas, which means more footfalls and better occupancy levels. This move will help the entertainment and exhibition industry move forward positively, with increased investments in both exhibition infrastructure and content development, enabling even better cinema and greater screen density across the country.

Business was not affected by this decision as footfalls were steady with a reduction in ticket rates. Amid growing costs for development of malls and cinemas infrastructure, a further reduction in GST for tickets above `100 ticket will further boost business and bring in better infrastructure in smaller cities/towns where there is greater scope for the exhibition business and for expansion.

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