Impact of GST on Media and Entertainment Industry
Globally India is the fifth largest media and entertainment market according to a Deloitte report. With a rapid growth curve, the Indian media and entertainment industry is a growing sector. The report also stipulated that by 2025 the industry would gain a $100 market.
The service sector contributes over 55% in the Indian economy. Multiple taxations of goods and services are not viable nor is it desirable. The introduction of GST in India is to reduce the tax burden on both consumers and companies. Earlier there was each stage in the supply chain was burdened multiple taxes. Resulting in an unclear end cost and applied tax on the products and services on sale, this structure of tax was complex. GST managed to combine most of the taxes into one single tax reducing the overall cost and the burden on the end consumer.
The rate of Entertainment TAX prior to the introduction of GST varied from state to state, ranging from 15% to 110% depending upon the services, location, type, and other benefits. Multiple VAT + service tax was included in the entertainment-related services. The VAT and service tax was charged at 14.5% and 15% respectively. The rate variance was stabilized after the implementation of GST and now provides a uniform market nationwide, which prevents arbitrage.
The key challenges from a tax perspective faced by the industry were effective tax rate, implications for cross-border transactions, managing tax risks, cash-blockage because of high withholding tax rate and multiple indirect taxes. Many input taxes paid in many transactions were regarded as tax cost hence not available as credit. Even dual taxes were levied on many operations as a result of the federal structure of Indirect tax structure.
Under the GST law, media and entertainment services industry is divided into 18% and 28% tax rate slabs respectively. The 18% GST Rate Slab includes TV and DTH services, theatre, circus, and classic dance events. The 28% GST Rate Slab is for both firms in cinema halls like movie tickets, casinos, sports event, amusement park, movie festivals, racing, as well as events.
GST, subsume most of the indirect taxes as the most significant tax reform in India.
GST Impact on Entertainment Industry
Business owners in the entertainment industry are paying GST on entertainment services. The amusement parks and movie theatres are also liable under State GST. This may be positive or negative depending upon the states that they are doing business in.
According to an analysis, conducted by the Multiplex Association of India, the impact of GST is negative in 12 States where the GST rate is 28%, Positive in 7 States and Neutral in 1 State.
GST impact – Broadcast services
Consumers are paying a service tax between 14.5-15% currently for broadcast services like Television including DTH and cable as well as films and all digital content. On top of that, 8-12% entertainment tax is further levied thus totalling the average tax to 25%. However, after GST came into play, consumers now only pay a single tax that varies between 18-20% reducing the overall tax burden on the end consumer.
GST Impact – Multiplexes and Film Production Houses
Multiplexes were charged 27% tax on the sale of tickets and levy on food and beverage revenue. GST after introduction increased the company margin by 4-5%. Film producers pay large amounts of money as service tax for processes like satellite rights, theatrical rights, etc. Under GST all taxes come under the same category.
GST, though a simple tax, yet it felt complicated to many people as it was new. Many people want GST Filing Software for GST eFiling. If you face issues and want a GST return filling software for shortening the tedious and time-consuming process, then you can use our GST eFile Software. It is convenient and straightforward to do online GST filing for small and big businesses. We provide affordable GST return filing packages so that your GST eFiling journey becomes smooth and hassle-free.