GST reimbursement for Kannada flicks soon

The state government may announce the reimbursement of money collected in the form of tax on Kannada film tickets in two days.

Since July 1, when the Goods and Services Tax (GST) was rolled out, tickets priced at Rs 100 or less are taxed 18%, while those priced at more than Rs 100 are taxed 28%. Prior to GST, Kannada films were exempted from entertainment tax of 30% as the government wanted to protect the interest of the Kannada film industry.

The Karnataka Film Chamber of Commerce (KFCC) wanted the government to protect the interest of Kannada film industry as the GST structure would adversely affect the industry. The KFCC’s contention was that the Kannada film industry suffered financial losses despite the tax benefit and the imposition of tax would be a big blow for the industry’s prospects. Chief Minister Siddaramaiah had declared in the Legislative Council that the government would reimburse funds collected in the form of taxes.

“The Finance department has almost finalised modalities and the government is expected to make an announcement soon, regarding reimbursement,” Sa Ra Govindu, president of KFCC, told DH.

“Out of tax levied on tickets, the central government takes 50% (CGST), while the state government takes the remaining 50% (SGST). The state has decided to reimburse its share of 50% to the Kannada film industry,” he said. This means, the government would reimburse its share of 9% for tickets priced Rs 100 and below and 14% for tickets priced Rs 100 and above.

The top brass from the finance department and commercial taxes department are working out modalities for the reimbursement. The Kannada film industry has suffered financial losses after the introduction of GST. In the last one month, collection for Kannada and regional films has dipped by 30%, said Govindu.

He said the Kannada film industry should bear the burden of CGST as the central government did not reimburse funds.

The Kannada film industry transacts business worth around Rs 400 crore every year and the transactions are likely to be adversely affected this year due to GST, he said.

Prices of tickets at single screens have been increased between Rs 5 and Rs 10 touching the Rs 100 mark, while the prices of tickets at multiplexes are mostly above Rs 100.

The commercial taxes department has directed producers, distributors and exhibitors to maintain accounts and make entries in forms from August 1. The department has directed them to submit the accounts on August 21.