Multiplexes urge Centre to reduce GST on film industry

The Multiplex Association of India (MAI) has requested Prime Minister Narendra Modi, Finance Minister Arun Jaitely and the Goods and Services Tax Council to lower the GST rate for the film industry and evolve a system whereby entertainment tax levied by local bodies is allowed to be set off from GST liability.

“We are completely shocked as the GST Council has decided to tax cinemas at the prohibitive rate of 28%, while we had expected the GST rate for cinemas to be either 5% or at worst 8%,” stated a press release by Deepak Asher, president, MAI.

Globally, taxes on entertainment are usually in single digits, since entertainment is seen to be an essential ingredient of social infrastructure. In several countries, taxes on entertainment are usually half the “revenue neutral” rate of GST, the release stated.

Many states are empowering local bodies to levy an additional entertainment tax. In substance, cinemas could well end up paying, not just a prohibitive 28% GST, but possibly a 10%-25% local body entertainment tax as well. This dual taxation at prohibitive rates would not only lead to substantial increase in ticket prices for cine-goers, but could well sound the death knell for the film industry, which already is faring quite badly due to the continuous onslaught of piracy and other formats of content delivery to the consumers, the release added.