Watching movies at cinema halls to cost you more under GST

Watching movies at cinema halls to cost you more under GST

Multiplex operators show expression as disappointment with the GST rate for cinemas, saying a low rate would have made watching movies more affordable to viewer.

The GST Council, led by finance minister Arun Jaitley, has fixed rate on movie tickets at 28 per cent , the highest rate slab which is also applicable for casinos and five­star hotels.

Jaitley on Friday said, “Cinema halls are currently paying a service tax of 15 per cent plus a state entertainment tax that ranges from 28 per cent to about 100 per cent . All these will be subsumed under 28 per cent GST rate, bringing down costs of service significantly.”

However, multiplex operators said that at 28 per cent the industry has not got a fair deal.

“It is shocking to see the government is classifying watching movies as luxury and subjecting us to the similar tax structure as of five­star hotels and casinos,” said Nitin Sood, CFO of PVR, a leading multiplex company for which entertainment tax is 26­27 per cent on tickets and 12 per cent on food and beverages.

 According to Sood, while the industry was lobbying for a lower slab, they were rooting for a 5 per cent or a maximum of 12 per cent standard rate. Cinema tickets do not attract service tax.

And while some states have high entertainment tax (Uttar Pradesh levies 65 per cent and Maharashtra 45 per cent , for instance), under their industrial policy, state governments also allow tax exemption for new properties, said Utkarsh Sanghvi, tax partner ­ media & entertainment at EY India. “Effectively, average tax rate on tickets is 8­10 per cent . If this goes directly up to 28 per cent , it is a negative impact,”

So, Multiplex Association of India has been pitching for a low tax rate. Madhya Pradesh, Rajasthan and Gujarat have indicated they will empower local bodies to charge entertainment tax.

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