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The Assocham, an association of trade bodies, has asked the Centre not to classify films as a ‘luxury’ while levying Goods and Services Tax (GST). It also wanted the government to do away with ‘local body entertainment tax’ levied on ticket sales in some states.
Assocham has come out with a report in association with consultancy firm PwC. The report - An overview of the impact of GST on the film industry - what, why and how -- relates to the concerns that bother the film industry after the implementation of the nationwide uniform tax regime.
GST considers movie tickets costing over Rs 100 a ‘luxury’ and imposes a tax of 28 per cent. “Tickets priced below Rs 100 attract 18 per cent GST. Some local bodies are allowed to levy an entertainment tax. This puts a burden on the industry,” the report said.
The states are allowed to levy ‘local entertainment’ tax, over and above the GST. “This could lead to additional burden on the industry in some states,” it said.
K V Rao, Chairman of Assocham’s National Council on Media and Entertainment, felt the tax structure needed to be reviewed by involving more stakeholders from the film industry. The report noted that GST has brought in uniformity in taxation. “Prior to GST, the rate of entertainment tax varied from state to state, ranging from 15 per cent to 11 per cent. Introduction of GST has stabilised the rate variance and provides a uniform market across the nation,” the report said.
Ticket prices to go up
Senior Telugu film producer, Tammareddy Bharadwaja, feared that GST could result in an increase in movie ticket prices. “On a Rs 150 ticket, they will have to remit Rs 42 as GST (at a rate of 28 per cent). It is not viable. Ticket prices will definitly go up in the next few weeks,” he said. As a result, footfalls in theatres would come down with the overall cost per family to watch a film going up.
M Srinivas, Commissioner of GST Commissionerate (Medchal), asked the film industry representatives to submit a detailed note, explaining the concerns with supporting data.
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