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Single-screen theatres oppose service tax
February, 27th 2012

An entertainment tax of roughly 40%, rising maintenance cost coupled with decreased occupancy have put most single-screen theatres in the city in a precarious position. Add to this a possible imposition of 10.5% service tax and the ticket prices would soar again, making the business completely unviable, says Vivek Damle, the secretary of Poona Exhibitors' Association.

To oppose the proposed service tax, single-screen theatre owners went on a strike on February 23.

The Poona Exhibitors' Association comprises 19-odd single-screen theatres in the city. "Survival, and not profit, is a priority for us. In the last five-six years, competition from multiplexes led to single-screen theatres increasing their ticket prices by Rs 20 to 30. Yet, they are still reasonable for audiences who cannot afford multiplexes. However, each single-screen theatre has to pay a 40% entertainment tax and meet several other maintenance expenses which amount to approximately Rs 1 lakh per month. There has been a decline in the occupany levels at such theatres, specially in the last three years," Damle said.

Unlike multiplexes that enjoy tax sops, single-screen theatres have to shell out a lot of money in taxes. Damle said, "Most of our members are struggling to breakeven, let alone make profits or see a full-house even on weekends. The annual average occupancy at such theatres is less than 20%. The existing law doesn't allow change of user or ownership because of which most owners of loss-making single-screen theatres cannot sell such a property. Given a choice, they would promptly sell off such theatres and move on," Damle added.

Theatres like Prabhat, which has a history as old as the Marathi cinema, have managed to survive the multiplex wave. "But such examples are few and far between. Most single-screen theatres are barely surviving. The burden of an existing entertainment tax, absence of a provision for change of user/ownership and the fear of an additional 10.2% service tax being levied in the future will lead to rise in ticket prices. But the imposition of the said service tax will make theatre rentals, too, costly," he said.

Damle cited the example of Apsara Theatre in Market Yard. "The theatre wasn't making any money. This added to its financial burden and the owner chose to close it down temporarily. But he had to carry on and re-open it as he cannot sell the property," Damle said.

The strike on February 23 led to each single-screen theatre cancelling three to four shows and losing anything between Rs 10,000 and Rs 20,000 each. "Survival is the key objective for us now. The three-odd shows of Marathi films at our theatre have an over 50% occupancy. But this is not the same for Hindi or English films anymore," said a source from Alka Talkies.

Maintenance charges, a hefty monthly electricity bill and steady ticket prices do not lead to profits either. "We want to continue making film screenings affordable for our regular set of audiencesAny more taxes will only add to our financial burden," the source added.

Single-screen theatres pay around 5.5% to 6% tax (part of the entertainment tax) if they have an air-conditioner. "Our customers are often those who cannot afford the high prices of tickets at multiplexes. We still follow an old model of a simple movie hall that sells popcorn and few other snacks, minus the entertainment facilities available at multiplexes," said Shyamrao Pawar, the manager at Neelayam Talkies, which enjoys a 30% occupancy on most week days.

Westend in Camp suffered a loss of about Rs 12,000 on February 23. "These days, most single-screen theatres like ours do business only on Fridays, Saturdays, Sundays and sometimes Mondays. Otherwise, the occupancy levels are not flattering," said a source from Vijay Talkies.

However, each single-screen theatre can recover a service charge of Rs 5 from the sale of each ticket. "The theatres are able to meet their monthly expenses especially by recovering Rs 5 per ticket from the audiences. Moreover, theatres need a good booker to get them a good supply of film releases. Fortunately, Apsara has a good booker ," said Damle.

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