Budget 2018: Bollywood wants tax break to boost theatre numbers

India’s film industry, battling falling theatre footfalls, is hoping that the government will encourage the proliferation of multiplexes in non-metros to meet the demand for entertainment in smaller towns and help curb rampant piracy.

A cinema goer watches aBollywood movie inside Maratha Mandir theatre in Mumbai December 11, 2014. REUTERS/Danish Siddiqui/Files

Finance Minister Arun Jaitley will on Thursday present the federal budget, where the government is expected to try and woo rural voters and small businesses as the country heads into a season of elections. The entertainment industry is not likely to be a big priority.

The Film & Television Producers Guild of India, the industry’s apex body, recently made several suggestions in a presentation to the finance ministry, chief among them that tax benefits should be given to all multiplexes built in non-metro cities, which have a lower density of cinema screens. As of now, multiplexes built till 2005 in such areas don’t have to pay tax on 50 percent of their revenue.

“In order to curb the scarcity of screens for viewing films and to cater to the demand of cinema viewers, it is essential to extend benefit… to multiplexes constructed after 2005,” the document said.

The paper said piracy, which is rampant in India, could be curbed if theatre density was increased. Apart from piracy, the film industry’s woes have been compounded by falling internet data costs in a booming smartphone market and the increasing popularity of streaming services.

The Guild’s demands also include abolition of the Minimum Alternate Tax on Special Economic Zones to help the setting up and development of media hubs.

The film industry, one of the most heavily taxed in the country, has been lobbying for years for tax breaks, without much success. Entertainment tax used to be as much as 45 percent in some states before the introduction of the nationwide goods and services tax (GST) last year.

With the introduction of GST, entertainment tax was placed under the highest tax slab of 28 percent. The Guild cited Bollywood’s “soft power” as a reason why movie tickets should be taxed lower, but its suggestions were not considered. Bollywood is not recognized as a formal industry by the Indian government, and doesn’t get the tax subsidies that some other formal industries are eligible for.

Meanwhile, India’s booming television and broadcasting industry is hoping that the government will start treating it on par with the telecom and IT industries. This would make it easier to get bank loans and acquire lands, apart from other industry-specific sops.

“We believe that the distinction between telecom, IT and broadcasting technology has disappeared and that a convergence of these sectors is required. A positive consideration of this demand in the 2018 budget will certainly help in the rapid growth and generation of substantial employment in our country,” said Punit Goenka, who heads the Indian Broadcasting Foundation.