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Service Tax Bogey

A s Guest Editor of this issue of Box Office India, I want to use this note to register my very strong reservation about service tax, which is undoubtedly one of the gravest challenges for our industry.

We are paying so much service tax for so many different heads. We cannot offset our service tax or pass it on to anyone. We can’t even pass it on to the theatres. As it is, taxation on films is so high, and Maharashtra in particular has one of the highest tax regimes.

How are we going to sustain? There is no support for us at all. The government is not treating us as an industry at all. There is a lack of responsibility on behalf of the government towards us. I am really disappointed because when we start paying service tax at every level, the profitability of this industry will be at stake.

We are trying to resolve it in association with the Guild and we plan to meet again and come up with some proposals and action points to try and ease this burden.

See, there are so many things that the government is doing to support regional films and indie films. Nothing wrong with that but why can’t the government support mainstream films? Just because we are a little profitable at times?

And you know this will further kill the small-films market. If the service tax is so high, small films can’t be made at all. You are killing an industry and the means of livelihood of so many people who are associated with this profession. The big films with a Shah Rukh Khan or an Aamir Khan will get released, these films will anyways release. It won’t impact them. But the impact will be felt by small films, where even a Rs 80-lakh increase in the budget will affect the film’s prospects and it becomes non-profitable. When will the government understand that they can’t do this and they have to do something about it? Service tax just can’t be 12 per cent for the industry to be able to absorb the hit.

We all need to come together to fight this. We should look at what impact taxes had on the construction industry and I am afraid that the same thing will happen to our industry.

Make no mistake, and don’t take this lightly just because we are in this bullish phase. The scenario that will unfold if we don’t do something about service tax is very, very scary.

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