With the Goods and Services Tax (GST) getting implemented from July 1, watching movies might turn out to be a costlier affair in several parts of the country. Initially, a flat GST of 28% was levied on all movie tickets, regardless of their price.

 The Goods and Services Tax (GST) is going to make movie nights just marginally cheaper in City. Cinema buffs now pay 30 per cent entertainment tax on each ticket. When GST comes into force, they will pay 28 per cent tax at the multiplexes, where no ticket is less than Rs 100.

However, Union Finance Minister Arun Jaitley announced revised GST rates, wherein tickets costing `100 and below were brought under the 18% slab, while those costing higher than `100 will continue to fall in the 28% slab.

 While the industry feels that the rates are still very high, what has irked them even more is the possible implementation of a local body tax (LBT), which will vary across the country, making movies the only product/service with dual taxation. However, levying LBT is at the discretion of individual states. For example, while reports suggest that states like Maharashtra, Gujarat and Rajasthan are already empowering their local bodies to levy entertainment tax over and above the GST, states like Kerala have decided against the idea.

Associations representing single-screen owners and multiplex chains met Maharashtra Finance Minister Sudhir Mungantiwar on Monday, to discuss the implementation of the new taxation scheme among other things. Nitin Datar, President of COEAI (Cinema Owners and Exhibitors Association of India), who was at the meeting, told BT, "Some exhibitors are happy that GST rates have been revised; it will bring in some uniformity in the tax structure. Earlier, while some states didn't levy any entertainment tax, some were levying 45% or more. However, smaller centres, where the tax rates were much lower than 18%, are likely to feel the heat. Of the 2,100 films made in India annually, only 400 are in Hindi. The rest are all regional films, of which few make a mark at the box office, despite being tax-free. Regional films across the country will be in a mess because for them, 18% and 28% are still very high figures. They shouldn't have been taxed over 5%, given that they incur more losses than profits. A few days prior to meeting the state Finance Minister, a delegation comprising studio honchos, producer bodies and Censor Board chief Pahlaj Nihalani had met Maharashtra Chief Minister Devendra Fadnavis and Union Minister Venkaiah Naidu, requesting some relief for the entertainment industry. 

The council has allowed state governments to refund their part of the GST component through direct benefit transfer (DBT) scheme. "We are partially happy with the revised tax rates. However, the devil is in the detail. The rules and the new taxation policy in itself is detrimental to regional film industries," said S R Prabhu, treasurer, Tamil Film Producers' Council.


For instance, the Tamil Nadu government has capped ticket prices at Rs 35 and the new GST tax rates would not have much impact on the trade. But there are other facets of GST, which has sought to bring various services involved in filmmaking under the tax net.

Keshav Garg, chartered accountant and faculty member for GST Indirect Tax Committee of ICAI, said: “There is going to be least impact on the cinema tickets in Chandigarh where the entertainment tax was already 30 per cent. It can create an impact in those states where entertainment tax is up to 65 per cent.” Keshav added that food and beverages sold at cinemas would also continue to cost more or less the same.

Since moviegoers are already paying a tax of Rs 18.5 per cent (VAT- 12.5 per cent and service tax 6 per cent) on the food and beverages being served at the multiplex, the same head, after the implementation of GST, would come in the slab of 18 per cent. There would be a difference of just 0.5 per cent in the snacks and beverages one buys there,” said Rajiv Sharma, a chartered accountant.

When the new tax regime rolls out on July 1, a business class ticket at Fun Republic, which costs Rs 400 inclusive of the entertainment tax now, will come down to Rs 392. Similarly, a normal ticket which costs Rs 150 at a 2-D hall at DT Cinemas in IT Park, will cost around Rs 147 after July 1. A gold ticket that costs Rs 200, will be sold at Rs 196 under GST rates. The ticket rates are almost similar at City Emporium mall in Industrial Area Phase 1.

Activist Ajay Jagga, who authored a book, Guide to the concept of GST, said, “There is nothing to cheer about for cinemagoers. People watch movies at multiplexes in Chandigarh and there is rarely any ticket which is below Rs 100.”

He added, “The only thing is that after GST, there will be just one tax on your bill.” A normal ticket on the weekday which costs Rs 180 each at the PVR Cinemas at Elante mall in Industrial Area Phase 1 will now cost Rs 176. The gold ticket that is priced at Rs 550 here will cost around Rs 541.

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