To protest against 10.3 per cent service tax imposition on film industry

Single-screen theatres across the country have vowed to shut their doors on February 23 to protest the government's move to slap 10.3 per cent service tax on the film industry.

Large multiplex chains, however, have withdrawn from the joint strike effort after a meeting with Finance Minister Pranab Mukherjee on Monday, though he refused a rollback.

“This is double taxation, as States already levy entertainment tax on us,” said Film Federation of India (FFI) president Vinod Lamba, speaking to reporters after the meeting with the Finance Minister. “The effective indirect tax cost on cinema will go up to 60 per cent.”

Entertainment tax ranges from zero to 67 per cent, depending on the State. The Empowered Committee of State Finance Ministers has also suggested that the Centre should not impose taxes on any items mentioned in the State List of the Constitution, including entertainment.

The FFI, an umbrella body including various industry associations, especially exhibitors, distributors and producers, says the strike would result in the closure of over 9,000 single-screen theatres. Multiplexes have less that ten per cent of the country's 10,561 cinema screens.

Shooting studios and production houses will also be shut, as the FFI says the strike has the full support of the Film and TV Producers Guild and the Indian Motion Picture Producers Association, as well as film artistes and technicians.

“This tax is going to hit the industry at multiple levels, since the producer, exhibitor and distributor will each have to pay separately,” said Ravi Kottarakara, a vice president of the FFI who is also secretary of the South Indian Film Chamber of Commerce. “We cannot afford to pass it on to the consumer, as box office ticket prices are already high.”

While over 1,200 films in various Indian languages are produced every year, only a small handful become blockbusters. “Everyone talks about the Bodyguards and Agneepaths, but we take the brunt of the box-office flops,” said Mr. Lamba. “What the industry needs is concessions, not additional taxes.”

While nationwide multiplex chains — members of the Multiplex Association of India — pulled out of the strike on Tuesday, smaller players promised to blank their screens.

“This is a token strike now. But if we don't get relief, it will become indefinite,” said Arijit Dutta of Priya Entertainments, which runs multiplexes in Kolkata. No one is willing to speculate on the cost of the strike to the industry. “Look at it this way. Our losses will be high [due to the strike], but if the government does not listen, the industry itself will be dead,” said Mr. Kottarakara. “We are fighting for survival.”