Impact of GST on Media and Entertainment Industry | H&R Block
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Taxability on Entertainment and Media Industry under GST

Most of us who work for 10 to 12 hours at a stretch for an entire week need some time to relax and have some time to ourselves. Entertainment being the big part of our lives makes us want to go out, visit some new places or simply visit a multiplex to watch movies on the weekends or on our days off.

In this blog, we will be discussing about the impact of GST on Indian media and entertainment industry. India’s media and entertainment industry is the fifth largest market in the world. The industry is a sunrise sector which has a rapid growth curve. In this article, we will note the impact of the GST rates on the industry and if it will work as well as the pre-GST regime did.

Pre-GST tax regime

During the pre-GST scenario, various services like the DTH, broadcasting, etc., were attracting an entertainment tax which varied across different states. At the same time, the entertainment industry was enjoying a 60% abatement on service tax. Therefore, after this abatement the industry only had to pay 40% of the actual 15 percent service tax levied on the entertainment industry.

Impact of GST on the industry

Under the GST regime, the items in the media and entertainment industry fall under 18 percent or 28 percent tax rate.

Under 18% bracket

  1. The DTH services and TV, theatre, circus and Indian classical dance consisting drama and folk dance.
  2. Services that provide admission into different entertainment events as well as films in cinema halls include movie tickets, casinos, movie festivals, racing and any sports events like an IPL match, with prices that are below INR 100.

Under 28% bracket

  1. Services that provide admission into different entertainment events as well as films in cinema halls include movie tickets, casinos, movie festivals, racing and any sports events like an IPL match, with prices above INR 100.

Impact on Consumers

GST is having a mixed effect that differs from one state to another. States that were having a high entertainment tax in the previous tax regime are enjoying the price reduction that GST has brought in its wake for the end consumers.

For example, in the multiplexes where the food and beverages were taxed a VAT at 20.5 percent and an average 30 percent tax on the tickets, the GST regime will allow tax for movie tickets at 28 percent and GST on food and beverages at 18 percent, reducing the price significantly.

However, GST is having a negative effect on states that had levied low entertainment tax.

See the table below to analyze the impact of GST on watching movies before and after the GST regime was introduced.

 Himachal Pradesh (0% Entertainment Tax)Maharashtra (45% Entertainment Tax)
Price of Ticket260260260260
Total ticket price260332.8377332.8
Popcorn and Coke150150150150
Tax on food36273627
Tax on Food and Beverage186177186177
Total446509.8 (Increase)563509.8 (Decrease)

Impact on Owners

Like the consumers, entertainment industry owners are also experiencing different impact of GST regime depending on the states. Amusement park and movie industries are seeing either a positive or a negative impact depending upon the states that they are established in.

Input Tax Credit (ITC) is now available on the services that includes catering, security costs, renting of the premises for movie/ cinema halls, which were not available under the previous regime. In this way, the input GST that has been paid while renting a premise can now be adjusted with output GST that comes from selling tickets.

An analysis of 20 states and union territories by the Multiplex Association of India shows that a 28 per cent GST on tickets will have a negative impact in 12 states, neutral in one and positive in 7.

Thus, the provision of ITC helps the owners of parks, movie halls, etc., stand to gain under GST. Furthermore, depending on the state, the impact of GST on the media and entertainment industry can be positive as well as negative for both the owners and the end consumers.

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CA Ankita Mathur
CA Ankita Mathur
Ankita, a Big 4 alumna, is a tax expert at H&R Block (India) with vast experience in managing GST-related business services. An avid traveller, Ankita is a regular contributor to the CAclubindia and loves helping people understand about GST and helping companies be GST compliant.