News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax | PPE Safety Kit SITRA Approved | PPE Safety Kit
Service Tax »
  Hotel bills of over Rs 20,000 will now reflect in your ITR; check other changes Income Tax Form 26AS
 How work from home may increase tax liability for certain employees
 How waiver or fall in rent may impact your tax liability
 What to do if you get a scrutiny notice from the tax department
  How many income tax returns (ITRs) are picked up for scrutiny each year
  Notification u/s 138 of the Income Tax Act, 1961 in respect of Competition Commission of India
 You may have to file ITR even though your income might not be taxable
 Tax saving investment options for lower income slabs Use this formula to calculate post-tax return
 Deadline to claim tax benefits under Section 80C expires today ITR Filing FY 2019-20
  Tax on your gold and real estate investments
 Notification of Sovereign Wealth Fund under section 10(23FE) of the Income-tax Act, 1961

Entertainment tax defeats purpose of goods and services tax (GST)
November, 19th 2010

Yet another dialogue among the state finance ministers in the balmy climes of Goa failed to create a consensus on the goods and services tax (GST) design, including the constitutional amendment for its introduction.

The worrisome aspect is that the various political bargains being made would undermine the basic objectives of GST. One such bargain is the continuation of the entertainment tax (currently levied on movie admissions and cable and DTH subscriptions) in addition to the GST. This is a matter of deep concern as it would give rise to significant distortions and be highly discriminatory to the film and television sector.

Supplementary taxes under GST are normally levied on sin products like alcohol and tobacco or polluting products. Such a tax on films is not justified. Indian films are one of the finest expressions of our art and culture and have been instrumental in showcasing India across geographical boundaries.

They need to be nurtured and encouraged. Internationally, entertainment is included in the VAT or GST base and is taxable like any other good or service. There are no examples of a supplementary tax being imposed in any of the countries reviewed.

In fact, the film industry is recognised as a priority industry and is subjected to reduced GST/VAT rates, and granted significant fiscal incentives. France, Germany, Spain and Sweden, for instance, charge super reduced VAT/ GST rates, which provide a reduction of more than 50% of the standard rates.

In India, the current entertainment tax structure is seriously flawed. It is a patchwork of many taxes being levied at punitive rates.

For example, movie admissions in Uttar Pradesh attract tax at a rate as high as 67%. Cable and DTH subscriptions attract the central service tax of 10.3%, as well as state or local taxes which could be as high as Rs 45 per month (in Mumbai).

Further, entertainment activities are inter senot treated at par and each activity attracts a different tax rate. Entertainment includes a variety of activities including art exhibitions, performance, game, sport or race, cinematographic exhibitions , amusement parks, video game parlours, bowling alleys and billiards/ pool joints, to name a few. Some of these are taxable, but others exempt. Where the tax applies, there is no uniformity in the tax design or the rate.

There is variation in the tax rates on the same entertainment source, but acquired at different places. For example, the tax on movie tickets can depend on the category of the city/town or its population. Many states grant exemption or apply subsidised tax rate on movies produced in regional or state languages. Some states exempt newly set up theatres/ multiplexes , creating discrimination against old theatres.

Separate tax on entertainment poses significant practical difficulties in the present times of fast-paced technological advancements and resultant mobility of entertainment avenues.

With the advent of modern technology , entertainment has taken more diverse forms and has become highly mobile . For instance, movies and films can be watched not just through cinema halls, cable or DTH connections but also on computers, mobile phones and media players.

Given this diversity, it is difficult to apply a separate tax on entertainment in a fair and equitable manner. Currently , cinema tickets and DTH and cable connections are subject to entertainment tax, which can be avoided if you watch a programme or movie at home on a DVD.

Home | About Us | Terms and Conditions | Contact Us | PPE Kit SITRA Approved | PPE Safety Kit
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting