Rollback TDS hike, Tamil film producers write to Finance Ministry
Producers who are working in the Tamil film industry have appealed to the Union Finance Ministry recently to take back the "sudden" imposition of an increased Tax Deduction at Source (TDS). The jolting increase to 10% from from 2% in TDS on the distribution of cinematographic films has come as a "shock," and they fear it can "lead to closure of the film industry."
Writing to FM Nirmala Sitharaman, TG Thyagarajan, treasurer of the Tamil Film Active Producers Association (TFAPA) and CII Media & Entertainment (South) chairman, said the industry never got the chance to revive fully in 2021 because a fresh lockdown was imposed. As per his calculations, investments amounting to Rs. 1,000 crore across 120 films remained stuck in the Tamil industry alone during the lockdown.
As theaters barely opened in 2021, producers have not been able to pay the interest on these investments and are "suffering." "The sudden imposition of 10% TDS under Section 194-J 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 (sic)," the letter read.
Citing data from a joint report by FICCI and a global consultancy firm EY, which was published in March this year, Thyagarajan said the "film entertainment segment" had declined by 40% in 2020 in comparison to the numbers for 2019. The fall from Rs. 11,900 crore to Rs. 7,200 crore in a year is likely to see another 25% decline in 2021, he added.
"In 2021, the film entertainment segment may decline further by another 25 percent and touch a level of around Rs. 5,000 crore turnover, which means, the industry would have declined by 60 percent in the last two years," TFAPA wrote to the Finance Ministry.
To note, the TDS on royalties related to cinematographic films was at 2% till March 2020 and was later reduced to 1.5% during the pandemic. TFAPA appealed to set the TDS at 2%, which can otherwise affect the livelihood of lakhs. Separately, the Indian Motion Picture Producers' Association (IMPPA) had earlier requested the Maharashtra government to organize an exclusive vaccination camp for its members.