GST impact: Entertainment tax tweaking by states results in disparity


Entertainment tax below Rs 100 attracts 18 per cent GST while above Rs 100 taxed at 28 per cent

With widespread protests in Tamil Nadu on the imposition of 30 per cent entertainment tax, apart from the Goods and Services Tax (GST) rate, the spirit of “good and simple tax” which aimed at uniformity seems to be getting muddied as states complicate the tax environment.

For the entertainment industry, below Rs 100 ticket fares attract 18 per cent GST while above Rs 100 are taxed at 28 per cent.

“My view on the additional tax in Tamil Nadu is that it is against the spirit of GST of one nation-one tax. It will kill the cinema business in the state,” Pune-based Hemant Panchamiya, MD of multiplex E-Square Leisure, told IANS.

GST expert Pritam Mahure said, “GST is introduced for uniformity and thus temptation to increase revenue through taxes should be best avoided. If taxes are increased by states/local bodies then effectively it will nullify the positive impact of GST.”

Under GST, the municipal and local bodies are allowed to levy a parallel entertainment tax along with GST.

“In India, we have multiple taxes such as taxes on vehicles and taxes by local bodies which are kept outside GST. Tweaking these taxes will only complicate the tax environment and deprive the taxpayers of good and simple tax regime,” Mumbai-based Jigar Doshi, Partner SKP Business Consulting LLP told IANS.

Abirami Ramanathan, President of the Tamil Nadu Film Chamber of Commerce has said that theatres in Tamil Nadu cannot operate by paying 48 and 58 per cent tax. The double taxation in Tamil Nadu will make the tickets more expensive than in neighbouring states like Kerala, Andhra Pradesh, Telangana and Karnataka.

West Bengal state government on the other hand has decided to give rebate on the 18 per cent GST rate, which may also go against the one-nation, one-tax spirit of GST.

Out of the 18 per cent GST rate to be imposed on regional cinema, the West Bengal government has decided to give 7 per cent rebate out of the nine per cent share of the state.

The state has also announced 12 per cent rebate on cinema tickets above Rs 100, which attract 28 per cent GST.

“The scenario in West Bengal is totally contrary to Tamil Nadu, and the state government has given reductions in State GST (SGST) to encourage regional cinema, but which again amounts to disparity in the spirit in which GST has been formulated for the nation,” Panchamiya said.

No state should be be permitted to exercise any changes in the tax structure of GST, he added.

Let’s take a look at the scenario on entertainment tax in other states.


State Finance Minister Thomas Issac said that the state government has decided to reimburse the local bodies if they face any revenue loss.

“It is well accounted what each local bodies used to get by way of entertainment tax from each of the theatres within their jurisdiction. The state government hence will reimburse that amount on a regular basis,” said Issac.

The state government has also promised to pay the local bodies an additional 15 per cent of what they collected as entertainment tax.


Under the GST, movie goers need to pay more to watch Kannada films, which were exempt from the state entertainment tax till June 30 in single screen theatres as well as multiplexes in cities and towns across the state.

While for Kannada films, single screen cinema theatres and multiplexes across the state have been notified to collect 18 per cent GST on tickets priced up to Rs 100 and 28 per cent on tickets above Rs 100, for non-Kannada films GST rate will be 18 per cent up to Rs 150 per ticket and 28 per cent on tickets above Rs 150.

“Under GST, non-Kannada films goers pay 2 per cent less, as the state entertainment tax was 30 per cent till June 30,” said state joint commissioner for commercial taxes K S Basavaraj.

Karnataka Film Chamber of Commerce (KFCC), however, urged the state government to exempt Kannada films from the GST as it was exempted from entertainment tax hitherto.


“It’s too early to comment anything yet. We have not yet received full information on the issue from the concerned authorities,” said Cinema Owners and Exhibitors Association of India (COEAI) President Nitin Datar.

As of now, the entertainment tax is replaced by a uniform 18 per cent and 28 per cent rate. However, there is a grey area on the crucial service charge levied by exhibitors and cinema halls.

Post-GST, distributors are reluctant to part with service charge in absence of any clear directives on it from the state government to the exhibitors, he pointed out.

If service charge is removed under GST, Datar said it may spell the death-knell for cinema owners and many would be forced to shut down.

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