Pay less for watching films in theatres, cable and DTH to turn cheaper

Movie buffs will have a reason to cheer, watching cable TV and DTH will also turn cheaper under the proposed Goods and Services Tax regime to be rolled out from July one after taxes on entertainment have been merged with GST.

Days after making public the fitment of rates in the GST Council meeting in Srinagar, the government Tuesday clarified that though GST rates on cinema was put in the highest bracket of 28%, in reality people will have to pay less for watching films in cinema halls.

This has been made possible after entertainment tax, which was as high as 100% in some states, has been merged with the GST.

“The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28%. However, the entertainment tax rates in respect of exhibition of cinematography films in theaters/cinema halls, currently levied by states are as high as 100% in some of the states,” finance ministry said in a statement.

Local governments such as municipalities and panchayats in every state will, however, have the right to impose entertainment tax.

The GST Council had in its earlier meetings allowed the local self government to raise revenues through imposing taxes on public utilities such as water and electricity and also entertainment.

“Taxes on entertainment and amusement (covered by the erstwhile entry 62 of state list of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a panchayat or a municipality,” the statement said.

“The rate of entertainment tax on cable TV and Direct-To-Home (DTH) levied by states is in the range of 10%-30% in many States. Apart from this, Service tax is also leviable at the rate of 15%. As against this, the rate of GST approved by GST Council on these services is 18%,” it said.

The rate of GST approved by GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18% ad valorem.

Further, the GST Council has approved an exemption upto a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the states.

“Thus, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services,” the ministry said.

At present, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods & inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs.