The entertainment industry has an important role to play in the Indian economy. The industry contributes a major portion to the Indian GDP. Entertainment tax which is sometimes addressed as “amusement tax” is a tax applicable on any form of commercial entertainment, such as exhibitions, movie tickets, sports events and more.
Regulations such as the entertainment tax rate and tax exemption are determined and collected by local governments. Entertainment taxes usually take the form of indirect taxes levied on buyers. Currently, the most discussed topic of tax is the implementation of online services, especially in streaming-based services such as Spotify, Netflix, etc. In this article, we will look at entertainment expenses GST, deductible entertainment expenses and related ideas. Taxation is an essential feature of our country’s governance model. Various taxes may apply to goods and services purchased and sold by businesses or individuals. Both personal and industrial income are taxable in India. This tax is an indirect tax. However, from 1 July 2017, the entertainment tax has been replaced by GST or GST.
Key points to know for Entertainment Tax in India
The entertainment tax is a tax levied by the government on movie tickets, commercial shows, music festivals, sporting events, amusement parks, theatrical performances, exhibitions, and various private festivals. It varies from state to state. The main features of the Indian entertainment tax are:
1. Tax rate: The entertainment tax rate varies depending on the type of entertainment and the location of the event. For example, tickets to events held in non-air-conditioned theaters have an entertainment tax rate of 28%, while tickets to events held in air-conditioned theaters have a tax rate of 18%.
2. Tax amount: Entertainment tax is levied on tickets for events, shows, and movies, but not on other items such as food and beverages that may be sold at the event. These products are subject to GST at the applicable tax rate, which is normally 18%.
3. Exceptions: Certain forms of entertainment, such as cultural events and events organized by charitable organizations, may be exempt from entertainment tax.
4. Collection and Execution: Entertainment taxes are collected by the state government and are usually enforced by local tax authorities.
5. Appeal Procedure: If an individual or entity disagrees with a decision to levy or collect entertainment tax, they have the right to appeal the decision to a higher authority.
When Does the Entertainment Tax Apply?
The entertainment tax was first introduced during British rule in India to limit social gatherings. However, this system survived into the post-independence era, here are the list of places where entertainment tax still applies:
- Amusement parks
- Activities related to sports
- Theatre Shows
- Video Games
- Celebrity Stage Shows
GST on Entertainment
Tax rates for goods and services may vary depending on the type of entertainment and event location. For example, tickets to events held in non-air-conditioned theatres have a GST rate of 28%, while tickets to events held in air-conditioned theaters have a GST rate of 18%.
It is important to note that GST is only charged on the sale of tickets to the event and not on the sale of other goods such as food and beverages that may be sold at the event. These products are subject to GST at the applicable tax rate, which is normally 18%.
Tax rates applicable to different types of entertainment post- Goods and Services Tax from July 2017-
|Types of Entertainment||Applicable GST Rate|
|Theatre Circus Indian Classical dance inclusive of folk dance Drama||18%|
|Movie festivals Amusement Parks Cinema Casino Race Sports events such as IPL||28%|
Impact of GST on Customers
The Goods and Services Tax (GST) has had a significant impact on entertainment tax in India. Before the implementation of GST, entertainment tax was levied by individual state governments and varied from state to state. Some states charged a high entertainment tax, while others charged none at all.
Under GST, the entertainment tax has been subsumed into a single tax structure. The GST Council has set a standard rate of 18% for all entertainment services, including movie tickets, amusement park tickets, and other forms of entertainment.
This has resulted in a reduction in the tax burden for some states that previously had higher entertainment taxes. However, it has also led to an increase in prices for consumers in states where entertainment tax was previously lower.
Hence, the impact of GST on entertainment tax has been mixed, with some states seeing a reduction in tax revenue and others seeing an increase. However, the simplified tax structure and uniform tax rate under GST have made it easier for businesses to comply with tax regulations and reduced the complexity of the tax system.