The proposed 2% cinema cess in Karnataka has sparked concerns across the film exhibition industry. The Multiplex Association of India (MAI) has urged the state government to reconsider the levy, warning that it could add to the industry’s tax burden and also be negative for the overall industry. Given below is a short excerpt of the exclusive interaction with Kamal Gianchandani President, Multiplex Association of India.
Q. At a time when consumers have cheaper OTT options, could an additional cinema levy then push even more people away from theatres altogether?
A. Every incremental tax, no matter how small it is, becomes a negative factor. Either it pulls down the demand or it reduces margin for exhibitors in case if they end up absorbing that tax. So it’s a negative for the exhibition business. I would also say this, that this is the first proper year when exhibition is bouncing back with robust theatrical footfalls, business, films doing consistently well at the box office after, you know, very difficult five or six years after COVID-19/pandemic impact and therefore, you know, in an era where businesses are looking for ease of doing business, governments are trying to promote it. This move by the Karnataka Government to levy an additional cess of 2% on movie tickets is negative for the film business. We are requesting the state government to reconsider this move.
Q. The argument really is that the cess is meant to create a dedicated welfare fund for cine and cultural workers. So, your stand on the objective and the way this is then likely to be funded?
A. We are absolutely for the welfare of cine and cultural workers. We absolutely support the state government regarding that, but to levy an additional tax on movie tickets is not the way to do it. I would not get into the other arguments because the matter is subjudice. I would say that the state government has means and resources to do welfare activities through many more channels. Additional levy when we are already paying GST of 18% is not a positive move. This will be counterintuitive. This will be detrimental for the industry and not favourable for the industry.
Q. Right, not favourable for the industry you say. So, if you had to give one message to the state government, what would that be? And for all those trying to understand this fresh debate that has emerged, what really is the way forward for a compromise and yet looking at the objective?
A. We fully support the state government’s initiative to support senior workers and cultural workers. We are all for welfare activities. We want to meaningfully and in a very constructive manner engage with the government, find ways and means in which these initiatives and activities can be promoted in the state. But urge the state government to reconsider the levy of 2% cess on movie tickets. We’re already paying GST. The whole principle of GST was to not apply tax on tax. Here in this situation, we are applying GST also on the 2% cess.
Exclusive: Karnataka 2% Cinema Cess Row: ‘Tax On Tax Will Hurt Industry,’ Says MAI President
