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After an entire week of hectic work schedule, entertainment is on your mind. However, GST can steal away the entertainment as movies, restaurants, cable services may get expensive post GST implementation.
In this article, we will discuss the impact of GST rates on the entertainment industry and whether it is becoming dearer or cheaper under GST.
Movie tickets – Cheaper or expensive?
Under the GST, entertainment tax will be merged with service tax and a composite 18% or 28% will apply on cinema services as well as gambling or betting at race course.
Theaters with ticket prices below Rs. 100 are eligible to pay only 18% tax whereas, theatres and multiplexes whose ticket prices are more than Rs. 100 have to pay a whopping 28% tax:
Ticket Price
GST Rate
Below Rs. 100
18%
Above Rs. 100
28%
Prior to rollout of GST, the ticket prices were fixed based on the entertainment tax imposed by the respective state government. Presently, in all the states in India, the entertainment taxes vary from 0 to 110%. Post GST implementation, ‘entertainment tax’ levied by states has been subsumed in the GST.
Hence, for states with a high entertainment tax, GST will be beneficial as it will reduce the prices for the end consumers.
Food and Beverages at entertainment places will be expensive
Food and beverages will attract GST of 18%. Currently, the service tax rate of food and beverages is 15%, and the entertainment industry enjoys an abatement of 40% on service tax. Hence, only 60% of the 15% service tax has to be paid. So, on and average the tax under current tax scenario is 11%.
Eating out at Restaurants will become cheapter
Non-AC restaurants will charge 12 per cent GST on food bill. Tax rate for AC restaurants and those with liquor licence will be 18 per cent, Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition. Five star hotel restaurants will be even more expensive as the GST rate will be 28 per cent.
The effective tax rate under current regime comes to somewhere around 18.5-20.5 per cent that varies for different states.
The GST Council has finalized 18 per cent tax rate on cable TV and Direct-To-Home (DTH) services. Currently, these services attract an entertainment tax in states in the range of 10-30 per cent over and above the service tax levy of 15 per cent.
Conclusion
GST will have a mixed impact on the entertainment industry, depending on the state. For states where the current state taxes are high, the end consumers will be benefited under GST. However, the effect of any additional local taxes (if levied) might have a negative impact.
