PVR Inox, on Wednesday, said that GST Council’s recent clarification on the tax rate on food and beverage sold in cinemas brings in tax certainty and will enable the industry to avoid GST-related litigations.

“PVR Inox and the entire cinema exhibition industry welcomes the clarification issued by the GST council on 11th July 2023 that food and beverages sold at the cinemas will get covered under the definition of “restaurant service” and would be subject to GST at 5 per cent (without availment of input tax credit),” it said in a BSE filng.

Also read: PVR-Inox to add 200 screens per year, synergies will lead to significant margin expansion

The company said that this clarification will help resolve the industry-wide concerns for the sector, which includes more than 9,000 cinema screens across the country. “It will help in avoiding GST-related disputes/litigation, ensuring tax certainty and revival of the theatrical business post-Covid. Further, PVR Inox was already charging GST @ 5% on all food and beverage sold at the cinemas and this clarification would not lead to changes in the tax position of the company,” it added.

Karan Taurani, Senior Vice-President, Elara Capital, said, “In the last two years, various State governments and local bodies were looking to apply different GST rates on different food items sold in cinema halls. This move will eliminate disparities and provide clarity by ensuring that all food products are subject to a 5 per cent GST rate. It is positive news since it will save time and effort for the exhibitors in fighting litigations against the States,” he said

Taurani added that in terms of financials and estimates, there is zero impact as cinema chains have already been charging a 5 per cent GST rate on F&B revenue.

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