The whole country is waiting for GST implementation with bated breath. While analysts have given different predictions about the new tax regime's impact on the economy and various industries, many questions remain unanswered because of its complex structure. Entertainment industry, too, is grappling with some such questions. The primary being -- What would be the overall impact on the industry? According to Girish Menon, Partner at KPMG in India, the new regime is going to be a mixed bag for the industry.
According to the new rules, there would a levy of 18 per cent for cinema tickets at Rs 100 or less and a tax rate of 28 per cent for tickets above Rs 100. The impact of this could be largely divided into two parts, Hindi and regional cinema. "If you look at films, the largest territories are Mumbai and Delhi. In both, entertainment tax before was upwards of 40 per cent. So overall you were effectively charging more than 50 per cent after factoring in service tax, VAT. Now, when the government says that the GST rate is 28 per cent for entertainment that obviously is a fairly big saving that they will make," explains Menon.
However, it's not all good news for the industry as besides these two regions there are several others regions in the country, which had either negligible or no tax on entertainment, but with introduction of the new structure, they would end up paying more. Marathi movies, for example, don't get taxed. "For most of the southern market, the entertainment tax is far lower. In fact, couple of states have either zero entertainment tax or very low entertainment tax, particularly when it came to regional content. If I take only VAT and service tax and all that net it was coming to be less than 18 per cent," adds Menon.
So now, when your rate is actually increasing that will hurt a lot regional content creators, Menon says. Consumers would now have to shell out more for watching south Indian movies but watching Hindi movies will get cheaper.
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