Producers of Gujarati films are up in arms against the tax-free service charge allowed to cinemas in the state of Gujarat. This is because the “unduly high” service charge reduces their share in the collections generated at the ticket windows. It may be mentioned here that service charge is the highest in Gujarat at Rs. 25 per ticket. The corresponding charges in Maharashtra, West Bengal and Madhya Pradesh are Rs. 9, Rs. 5 and Rs. 10 respectively.
Not many years ago, the tax-free service charge allowed to cinemas and multiplexes in Gujarat was Rs. 7. Slowly but steadily, the charge went on increasing and today, it is more than thrice that rate, and stands at Rs. 25. As the tax-free service charge is entirely to be kept by the exhibitor and used for repairs and upkeep of the cinema, the distributor’s share is determined from what remains of the box-office collections after deducting the GST and the tax-free service charge. With the service charge deduction being Rs. 25 per seat, what remains to be shared between the exhibitor and distributor is net of the 18% GST and Rs. 25.
It is because of this that producers and distributors of Gujarati films have to remain content with lower shares than they would be entitled to if the same Gujarati films were to release in other states. In fact, it is often seen that exhibitors make more money in Gujarati films than the producers! It is for this reason that the Gujarati film industry has initiated a joint protest against the unduly high service charge. Needless to add, the cinemas of Gujarat are not part of the protest.