The report discusses, in brief, impact of GST on producers, studios, distributors and cinema exhibitors.
Prior to introduction of GST, the rate of Entertainment Tax (a major tax component) for the film industry varied from state to state, ranging from 15% to 110%. Implementation of GST has stabilized the rate variance and provides a uniform market across the nation, which in turn prevents the arbitrage.
However, the risk of an additional tax (i.e. local body entertainment tax, as proposed by some states) could again create market and price differences The government, in its rate rationalisation exercise reduced the GST rate from 28% to 18% on amusement parks. And, cinema owners have also called for reduction in GST on tickets above 100 INR, which presently attracts 28% GST, through a public appeal in leading newspapers. The cinema owners would now be able to use taxes paid on procurements, to set-off their output tax liability. Earlier payment of entertainment tax was a sticking cost to screen owners
Further, in general, with seamless credit facility in the GST regime, the credit of taxes paid on procurement goods can now be used for payment of liability on services and vice versa. This will certainly remove a few impediments, for this service sector.
© 2018 - 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.