No movies on Feb 23? FFI Strike against Service Tax

By FNN | February 2, 2012, 10:18am IST

Film Federation of India calls for a daylong token strike across the country to protest the service tax imposed on it

The Film Federation of India (FFI) has called for a countrywide bandh for the film industry on February 23. This is to protest the government's move of bringing the film industry under the purview of the service tax.

According to a circular sent to various associations, the film industry is in deep trouble because of the various taxes imposed on it, and service tax will only increase the already heavy burden.

The film associations across the country had a meeting in Chennai last month to discuss how to protest the move.

While the Film Producer's Guild (which has most Bollywood producers under its umbrella) proposed an indefinite strike, the Federation has proposed a one-day token strike.

Defending this decision, Supran Sen, secretary general, FFI, said, "This is a token strike where we propose to keep the theatres closed for a day, just to show our solidarity. If it doesn't work, we will take a decision whether we should go on an indefinite strike."

It has also been learnt that the South Indian Film Chamber of Commerce which wields considerable power over the entire South Indian film industry, plans to file a case against the government's decision.

Trade analyst Amod Mehra says that service tax levied at every level ends up making a big dent in the budget of a film.

"As it is the industry is burdened with entertainment tax, how will films recover money at this rate? Big films made with a budget of about Rs 30-80 crore will end up paying a big chunk of their budget. It will also hit smaller films and regional films badly," he said.

'Make it indefinite'

Distributor and exhibitor Ramesh Sippy insisted that only an indefinite strike will work at this stage. "The Film Producer's Guild and other associations most probably will go with this decision. My personal opinion, however, is that we should go on an indefinite strike. This service tax is going to be a huge burden on filmmakers. We are already levied with taxes including entertainment tax; this is going to be a heavier burden.

"The government is harbouring the misconception that the film industry makes more profit than it actually does. They don't realise that most figures are gross and not net. They are hoping to make around Rs 8,000-10,000 crore per year but in actuality they will barely make about Rs 50-100 crore. However, this will affect big and small filmmakers in a big way."

Sippy remembered that about 25 years ago, the industry had gotten together to go on an indefinite strike against sales tax. The strike, which went on for 45 days, had succeeded in getting the government to abolish the tax.

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