What the GST rates on cinema tickets means for the South Indian movie trade

Sreedhar Pillai

Jun,12 2017 15:41:46 IST

The Goods and Service Tax (GST) council on Sunday decided to reduce tax rates on 66 items including movie tickets. The entire south film industry was up in arms against the stiff 28 percent GST on cinema tickets.

Now, select movie tickets below Rs 100 will have only 18 percent as tax while tickets costing over Rs 100 will have to pay the earlier suggested 28 percent GST.

Cinema-goers wearing 3D glasses watch a movie at a PVR Multiplex in Mumbai November 10, 2013. Multiplex operators like PVR Ltd, Inox Leisure, Reliance Mediaworks and Mexican chain Cinepolis are scrambling to set up theatres targeting the rapidly growing number of middle-class Indians willing to pay to watch Bollywood movies in more comfortable surroundings. The potential is huge, provided operators can find the right location in a country where prime urban real estate is costly and in short supply. Picture taken November 10, 2013. To match MULTIPLEX-INDIA/ REUTERS/Danish Siddiqui (INDIA - Tags: SOCIETY BUSINESS ENTERTAINMENT) - RTX15KPF

Representational image. Reuters.

As far as Tamil Nadu is concerned it is a victory of sorts. Nearly 80 percent of the screens in Tamil Nadu mainly outside Chennai city and suburbs are supposed to sell tickets below Rs 100. In small towns and villages for the opening day of a big hero film tickets are illegally sold at higher rates, with lots of tax adjustments.  It will only be the multiplexes in Chennai and Coimbatore which will be hit by 28 percent GST, as they sell tickets in the Rs 100 to 120 slab rates.

There is still no clarity from Tamil Nadu government whether they will allow an increase in ticket rates, something that hasn't been revised for the last 10 years.

A High Court order is pending to increase ticket rates, which is yet to be implemented by Tamil Nadu government. The government is thinking whether they should make the current gross (Net + Entertainment Tax) amount, for example in Chennai multiplex Rs 120, the new net amount and add additional 28 percent as GST.

It will mean a multiplex ticket in Chennai will be around Rs 153.60, assuming net amount is Rs 120. This will enable the government to adhere to the High Court order of raising ticket prices and at the same time implementing GST.

However the local bodies like corporation, municipalities and panchayats will lose their regular source of income. Will the TN government compensate the local bodies or will local taxes be added to GST? These questions remain unanswered as the TN Finance Minister D Jayakumar said that he would introduce the GST bill in the state assembly, when the session starts on June 14.

Abirami Ramanathan, president of Tamil Nadu Theatre Owners Association said: “ Let the TN government first come out with their GST bill, and then we will have some clarity on the new ticket rates. We will know the situation better after the new tariffs are implemented.”

Updated Date: Jun 12, 2017 15:41 PM