With new GST services rate, will movie tickets price become cheaper?

Mumbai: On Friday, Finance Minister, Arun Jaitley said that the GST (Goods and Services Tax) will include present entertainment tax and service tax to replace it with a single 28% tax.

Maharashtra government had imposed an additional 10% Entertainment Duty on movie tickets priced between Rs.251 and Rs.350 from 2013.

The application of the coexisting elimination of entertainment tax, which is as high as up to 45% or even 100% across various states, will efficiently make cinema tickets cheaper.

The overall average entertainment tax in India is approximately 35 to 40%.

So, entertainment industry will benefit by 10% approximately, in essence. Hopefully cinema owners will pass on the benefit to consumers.

The nett. collections of Bollywood films will shoot up big time once GST is applicable!

This GST will prove beneficiary for everyone, including the producers, exhibitors, and customers.

The entertainment industry has seen tough times recently with some single-screen theatres even shutting down.

Gireesh Menon, Director- Media and Entertainment, KPMG explained the impact of GST on the movie business, and said to a news portal, “In the past, you had service tax levied on certain elements of your business and certain elements sales tax was getting levied and then there is entertainment tax that is charged separately. These were considered as separate cost elements without getting any off-setting happening at all.”

"Entertainment tax rates are high in states like Maharashtra, Delhi and Uttar Pradesh. Delhi and Maharashtra contribute 60 percent to the profit collections and the taxes are high in these sectors. Thus, these states could gain from GST," added Menon.

But, the scenario changes for states that have low entertainment tax.

“There are few states where entertainment tax is zero which will result in lesser benefits to these sectors,” added Menon.

Here is the list of Entertainment Tax State wise:

1.Andhra Pradesh - 20% (15% for Telugu Films)

2.Assam, Himachal Pradesh, Jammu & Kashmir, Rajasthan, Punjab and Uttaranchal (Nil)

3.Bihar - 50.00%

4.Delhi- 20.00%

5.Gujarat -20.00% (Nil for Gujarati Films)

6.Haryana -30.00%

7.Jharkhand -110% (Nil for Jharkhand Films)

8.Karnataka -30% (Nil for Kannada Films)

9.Kerala- 30.00%

10.Madhya Pradesh -20.00%

11.Maharashtra -45% (Nil for Marathi Films)

12.Orissa -25.00%

13.Tamil Nadu -15% (Nil for Tamil Films)

14.Uttar Pradesh -30% to 40%

15.West Bengal- 30% (2% for Bengali Films)