One essential feature of the governance model of any country is taxation. Different kinds of taxes are applicable on services and goods, bought and sold by people as well as enterprises. Income earned by individuals and business houses also attract tax in India. By definition, entertainment tax is a type of tax which is levied by the government on entertainment aspects like movie tickets, large scale commercial shows and other private festival celebrations. With the implementation of the Goods and Services Tax (GST), the entertainment tax is no longer applicable.
Entertainment tax is inclusive of the tickets we buy to watch movies or large scale entertainment shows.
A few prominent features of entertainment tax are as follows-
This tax is applicable for any form of entertainment all over the country and is a part of the different costs borne by customers
The authorities responsible for collection of entertainment tax from customers are the State governments
In the country, entertainment tax is different for different states as it falls under the purview of the state governments
All the rules and guidelines that are applicable to the entertainment tax in India are listed in Article 246 of the Indian constitution
Paid television services such as Tata Sky, Airtel TV, Dish TV etc. have led to even more taxes being levied on entertainment
Entertainment tax is also applicable on the below mentioned categories of entertainment as well:
Exhibitions
Arcades
Celebrity Stage Shows
Theatre Shows
Video Games
Activities related to sports
Amusement Parks
Launched during the time when British ruled the country, entertainment tax came into existence so as to curb public gatherings. However, the application of entertainment tax continued in the post-independence era as well and currently, still exists in all states of the country.
Entertainment tax is considered to be under the purview of the state governments in India, and hence, different states of the country have different entertainment tax rates applicable. The table below summarises the prominent entertainment tax rates in different states of the country.
| Name of the state | Rate of tax |
|---|---|
| Uttar Pradesh | 60% |
| Bihar | 50% |
| Maharashtra | 45% |
| Karnataka | 30% |
| Kerala | 30% |
| West Bengal | 30% |
| Haryana | 30% |
| Orissa | 25% |
| Delhi | 20% |
| MP | 20% |
| Gujarat | 20% |
| Andhra Pradesh | 20% |
| Assam | 15% for tickets that cost less than Rs.20 and 20% for tickets that cost anything above Rs.20 |
| Tamil Nadu | 15% (All Tamil films are tax-free in the state) |
| Jharkhand | 10% |
| Rajasthan | 0% |
| Jammu & Kashmir | 0% |
| Himachal Pradesh | 0% |
| Punjab | 0% |
This table encapsulates the final tax rates that are applicable on entertainment post implementation of GST from the month of July in 2017-
| Type of entertainment | GST rate applicable |
|---|---|
| Circus Theatre Drama Indian Classical dance inclusive of folk dance |
18% |
| Movie festivals
Cinema Amusement Parks Race Casino Sport events such as IPL |
28% |
Here’s an example with the help of movies, to understand the impact of GST on the end customer. In multiplexes or movie theatres, food and beverages are taxed at a VAT of 20.5% and tickets are taxed at an average of 30% tax. All of this is dependent on the state where the customer watches a movie.
GST on movie tickets is applicable at the rate of 28%. Food and beverages fall under the purview of food and drinks in outdoor catering, and hence attract 5 - 18%. Therefore, it is evident that the GST rates for the entertainment industry are lower than the VAT and Service Tax.
Overall, GST has multiple effects on the entertainment industry, and varies according to different states. For states where the entertainment tax was higher than others, GST has proved to be beneficial, as it reduces the prices for the end customers. However, GST has an inverse effect on states that already had a low entertainment tax.
What is the entertainment tax?
Entertainment tax is a kind of tax which is levied by the government on entertainment aspects like movie tickets, large scale commercial shows and other private festival celebrations.
Is entertainment tax a direct tax?
No, entertainment tax is an indirect tax. Some other types of indirect taxes are excise duty, service tax, VAT, custom duty etc.
How much is tax on movie tickets?
Movie tickets end up attracting 28% GST.
What is entry tax in India?
Entry Tax is the tax levied on movement of goods from one state to another. This tax is imposed by the state governments and is levied by the recipient state to protect its tax base.
What is the maximum deduction for meals and entertainment?
In most situations, you can only deduct 50% of entertainment expenses. However, you are allowed to deduct 50% of the meals, in case they are for entertainment purposes, but not if they already have been deducted for business travel.
