Entertainment Tax In India

In India, the entertainment industry is a huge part of the economy. The sector employs millions of people and contributes billions of rupees to the GDP. To help this industry grow, the government has put in place various taxes and regulations. This blog post will provide an overview of Entertainment Tax in India. We will discuss the history of this tax, how it is levied, and what businesses need to do to comply with it.

What is the Entertainment tax?

Entertainment tax is a tax levied by the government on the entertainment industry. This tax is imposed on various forms of entertainment, such as movies, theatre, dance, music, sports, and gaming. The rate of tax varies from state to state.

Entertainment tax in India:

In India, the entertainment tax was first introduced in the year 1948. The current rate of entertainment tax in India is 30% for most of the states. The entertainment tax is levied on movie tickets, gaming, and gambling. The rate of GST on movie tickets is 28%.

The rate of GST on gaming and gambling activities is 18%.

The state government imposes the entertainment tax and the central government levies the GST. The revenue collected from the entertainment tax is used for the development of the film industry.

The entertainment tax is a major source of income for the government and it helps in the development of the film industry.

What are the features of entertainment tax in India?

Here are some of the basic features of  entertainment tax in India:

-The tax is imposed on all kinds of entertainment and amusement activities including cinema, theatre, sports, games, recreation clubs or any other form of entertainment.

-The rate of tax differs from state to state and also from Union Territory to Union Territory.

-In some states, the entertainment tax is levied on both the organizers as well as the participants while in some others it is levied only on the organizers.

-The entertainment tax is generally calculated as a percentage of the total ticket value or gross receipt generated from the activity.

-In a few states, there is a cap on the maximum amount of tax that can be levied per ticket.

-Entertainment tax is not levied on activities which are of educational or religious nature.

-In a few states, entertainment tax is not levied if the total ticket value does not exceed a certain threshold limit.

-Entertainment tax is also not levied on complimentary tickets.

Entertainment Tax in GST:

With the introduction of the Goods and Services Tax (GST) in July 2017, the entertainment tax has been subsumed into GST. Consequently, there is no separate levy of entertainment tax in India now. However, a few states had levied additional taxes on top of GST which is popularly known as ‘entertainment tax’. These states are Assam, Bihar, Kerala, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, Telangana and West Bengal.

The GST rate on entertainment activities is 18% which is higher than the earlier effective tax rate of 15-20%. As a result of this, the overall tax burden on the entertainment sector has gone up. This has led to an increase in ticket prices for cinema and other entertainment activities.

The additional tax levied by the states on top of GST is in the range of 20-30%. The total tax incidence (GST+Additional Tax) on entertainment activities in these states now ranges between 38-48%. This is one of the highest tax rates in any sector in India.

It is to be noted that the additional taxes levied by the states are not uniform.

For example, in Maharashtra, the tax on cinema tickets is 28% while in Tamil Nadu it is 30%. Similarly, in Kerala, the tax on theatre tickets is 20% while in Madhya Pradesh it is 25%.

Entertainment GST rate in India:

The table below provides a state-wise break-up of the total tax incidence on entertainment activities:

State                Total Tax Incidence (%)

Assam ……………………………………….. 15

Bihar …………………………………………. 50

Kerala ………………………………………… 30

Madhya Pradesh ………………………… 40

Maharashtra ……………………………. 45

Odisha ……………………………………… 25

Tamil Nadu …………………………….. 15 (no tax for Tamil films)

Delhi ……………………………….. 20

Jharkhand…………………………… 20

From the above table, it is evident that the total tax incidence on entertainment activities in India is quite high. This has made these activities unaffordable for a large section of the population. There is a need to rationalize the tax rates and bring them down to a reasonable level. This will help boost the growth of the entertainment sector and also provide relief to the consumers.

Conclusion:

Entertainment tax in India is a complex and ever-changing topic. However, the GST rate for entertainment is currently 18%. It is important to stay up-to-date on changes in entertainment tax law, as the rates can vary depending on the type of entertainment being provided. Overall, the introduction of GST has made the process of paying entertainment tax simpler and more streamlined. However, it is still important to be aware of the rates and how they may change in the future. Do you have any questions or comments about entertainment tax in India? Leave a comment below! Thank you for reading!