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Taxation on entertainment, cable, DTH services to come down under GST regime

24 May 2017 Evaluate

Easing fears of increase in prices of some services, the government has said that taxation on entertainment, including cinema, cable and DTH services will come down under the goods and services tax (GST) regime, as the ‘entertainment tax’ levied by States has been subsumed in the GST.

The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28 percent. At present, States impose entertainment tax of up to 100 percent in respect of exhibition of cinematography films in theatres/cinema halls. Under new tax regime, the entertainment tax has been subsumed, and hence only the taxes levied by a panchayat or municipality on entertainments and amusements will continue.

In case of cable TV and Direct-To-Home (DTH), the GST rate has been pegged at 18% as against the entertainment tax ranging between 10% and 30% levied by states plus the 15% service tax charged by the Centre. With regard to circus, theatre, Indian classical dance including folk dance and drama, the GST rate is 18 per cent ad valorem. Further, the GST Council has approved an exemption up-to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the States.

Therefore, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services.

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