The Tamil Nadu Film Active Producers Association appealed to Union Finance Minister Nirmala Sitharaman on Monday to reduce the Tax Deduction At Source (TDS) for cinematograph films from the new rate of 10% to the previous rate of 2%, citing the toll the pandemic and the lockdown have taken on the film industry.
In his letter to Ms. Sitharaman, T.G. Thiagarajan, chairman, CII - Media & Entertainment (South) and treasurer, TFAPA, said that the revival of the industry from January 2021 — after the lockdown imposed in 2020 until October — was stopped as a second lockdown was imposed in April 2021 by State Governments across the country. “The sudden imposition of 10% Tax Deduction at Source (TDS) under Section 194-J (Fees for professional or technical service) on professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films has come a big shock to the entire industry,” he said.
He estimated that at least ₹1,000 crore of investment has been locked in over 120 films in the Tamil film industry alone.
‘Growing debt’
“The producers are unable to pay the interest due on these investments to lenders and banks, and many are going through very difficult times and severe losses,” he said.
Mr. Thiagarajan cited a joint report by FICCI and global consultancy firm EY released on March 27, 2021, which said that the “film entertainment segment” has declined by 40% to ₹7,200 crore in 2020 from ₹11,900 crore for 2019, a steep fall for the industry.
“In 2021, it may decline further by another 25% and touch a level of around ₹5,000 crore turnover, which means, the industry would have declined by 60% in the last two years. Any drastic change like TDS at 10% shall lead to closure of the film industry, especially through theatrical business, which will impact lakhs of people associated with the film industry,” he said.
