Taxes on entertainment, cable, DTH to come down under GST

The Dollar Business Bureau

The government said on Tuesday that taxes on entertainment, Direct-To-Home (DTH)  and cable services would come down in the new Goods and Services Tax (GST) as 'entertainment tax' that is imposed by the states has been included in the GST regime.

The services offered through admission to cinematography films or entertainment events in cinema halls will be imposed with a rate of 28% under GST effective from July 1, the Finance Ministry said in a statement.

Presently, the states levy entertainment tax of up to 100% with regard to exhibition of films in cinema halls/theatres.

The entertainment tax has now been subsumed under the GST, and therefore only the taxes imposed by a municipality or panchayat on amusements and entertainments will stay.

“Entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services,” the statement said.

The GST Council has decided a tax rate of 18% on cable TV and DTH services.

Presently, the states impose entertainment tax on these services in the range of 10-30% over and above the 15% service tax.

With regards to theatre, circus, classical dance together with folk dance and drama, a rate of 18% will be levied under GST.

Presently, the states levy entertainment tax on these services, the statement said.

“Presently, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods and inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs,” it added.

While the GST is a value-added tax, the entertainment tax currently imposed by the states is similar to a turnover tax, it said.

The GST Council, last week, had finalised the tax rates of more than 1,200 goods and 500 services in a four slab rate structure of 5%, 12%, 18%, and 28% under the new GST regime.