2 min read.Updated: 22 Dec 2018, 09:49 PM ISTLata Jha
The 28% GST slab for entertainment tax had hit the single-screen market the hardest, particularly in states that had, until then, charged negligible or zero entertainment tax
New Delhi: The Indian film industry is in for huge relief as the tax rate for movie tickets above ₹ 100 has been brought down to 18% from the 28% fixed by the GST Council last year. Cinema had remained part of the highest tax slab, wherein film tickets whose price exceeded ₹ 100 were subject to 28% GST, while those below the rate worked with 18%, resulting in high ticket prices for movie-goers.
“On behalf of the Indian film industry, I would like to thank the government for taking this progressive step," said Siddharth Roy Kapur, president of Producers Guild of India. This, he added, will help the industry move forward positively with increased investments in both exhibition infrastructure and creative development, enabling even better cinema and greater screen density across the country.
“We look forward to continuing to engage with the government on initiatives that will help to unleash the full potential of the film industry. Cinema can be a significant instrument of Indian soft power around the world, while continuing to act as a uniting force for all Indians — a role it has played for more than a century," Roy added.
The 28% GST slab for entertainment tax had hit the already-dying Indian single-screen market the hardest, particularly in states that had, until then, charged negligible or zero entertainment tax.
Previously, states such as Uttar Pradesh and Delhi charged 66.6% and 40% entertainment tax on the net earnings of a movie so that the 28% rate was beneficial to exhibitors there, provided further local taxes were not announced. But the picture in many states such as Punjab in the north and Tamil Nadu, Andhra Pradesh and Kerala in the south was much different.
The former had charged zero entertainment tax until the imposition of GST. In several south Indian states, not only were ticket prices always been capped, but regional cinema, including Kannada and Malayalam films, worked with very low tax rates — in the range of 10 to 15%. In fact, in October this year, about 350 cinemas in Madhya Pradesh closed down to protest the imposition of 15% local tax in addition to the 28% GST, saying it was not just unviable to run exhibition business this way, but it also defeated the entire purpose of “one nation, one tax." Trade experts had said the exhibition sector in Madhya Pradesh incurred losses of nearly ₹ 15 crore, thanks to the shutdown.