Mumbai

GST cut on movie tickets brings cheer

High hopes: Theatre owners are expecting a rise in footfall with the reduction in the tax rate on movie tickets.

High hopes: Theatre owners are expecting a rise in footfall with the reduction in the tax rate on movie tickets.   | Photo Credit: DANISH SIDDIQUI

GST Council reduced tax rate from 28% to 18%, which came into effect on Jan. 1

Just days after coming into effect, the reduction in the Goods and Service Tax (GST) on movie tickets is already benefiting consumers, according to experts.

On December 22, last year, the GST Council brought down the tax rate for 23 goods and services to 18%. The new rate came into effect on January 1, providing relief to moviegoers and theatre owners. The GST Council in 2017 slotted movie tickets as luxury goods and imposed a 28% tax on it.

Positive response

While people are paying less GST for watching films, theatre owners are expecting a rise in the footfall. The industry has responded positively to the development. “We had been pressing this for a long time. The intention of the reduction in the GST on ticket prices was to pass on the benefit to the consumer,” Deepak Asher, president, Multiplex Association of India, said.

Anita Rastogi, partner at PricewaterhouseCoopers, said, “Watching movie in a theatre is no longer a luxury. In the world of content on other digital platforms, there is a competition for the cinema business in the country. A high rate tax was a challenge.”

According to Ms. Rastogi, input tax credit should be considered as another element apart from the GST in the reduction in the prices of movie tickets. Ms. Rastogi said, “Input Tax Credit is the GST paid on procurement of goods and services. Suppose the GST charged by the vendor is ₹10 on the purchase made, such GST would be treated as input tax credit. Now when the supply of services is made by a business, this input tax would be eligible as a credit for payment of output tax. Now, if the total output payable is ₹100, then one can utilise ₹10 of input tax credit and balance can be paid in cash. If one gets more input tax credit, one needs to reduce that from the cost of the service, thereby reducing the price.”

Word of caution

On preventing profiteering and keeping a check on the prices, Ms. Rastogi said consumers will have to be aware. She said, “Complaints are filed by consumers to the anti-profiteering authority. Somebody, who watched a movie on December 31 and January 1, can pick up the two tickets and see if the prices have been reduced. If they have not been reduced, people can lodge complaints with the authority concerned.”

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Printable version | Mar 29, 2020 3:20:39 PM | https://www.thehindu.com/news/cities/mumbai/gst-cut-on-movie-tickets-brings-cheer/article25915030.ece

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