Union Finance Minister Nirmala Sitharaman, while presenting the new Income Tax Bill 2025 in Parliament, highlighted the rationalisation of entertainment tax under the Goods and Services Tax (GST) regime. Responding to concerns raised by MP and former actor Jaya Bachchan, Sitharaman emphasized that GST has significantly reduced the tax burden on the film industry compared to the pre-GST era.
Entertainment Tax Under GST
Before GST implementation, entertainment services were taxed at an average rate of 30%, with movie tickets attracting multiple state-level entertainment taxes, VAT, and service tax. In some states, entertainment tax soared as high as 100%, making cinema an expensive affair. However, with GST:
- In 2018, the GST rate on movie tickets above ₹100 was reduced from 28% to 18%, following discussions in the GST Council.
- Tickets priced below ₹100 attract a lower 12% GST, making cinema more affordable for the masses.
- Food and beverages sold within theatres, which were earlier heavily taxed, now attract a 5% GST rate, including items from food stalls and counters.
Concerns Over Decline in Cinema Attendance
Jaya Bachchan raised concerns about the declining footfall in cinemas, particularly affecting single-screen theatres, and urged the government to take further steps to support the film industry. She pointed out that no further reduction in entertainment tax has been made, which continues to impact theatre operators and moviegoers.
In response, FM Sitharaman reassured that the government is actively working to boost India's media and entertainment industry by positioning the country as a global hub for filmmaking.
India's Push for Global Media Leadership
To enhance India's position in the global entertainment sector, FM Sitharaman announced key initiatives:
- Waves 2025 - The World's First Audio-Visual Entertainment Summit: Set to take place in Mumbai, this event aims to showcase Indian creative talent and attract international collaborations in the film and media industry.
- National Centre for Excellence in Animation, VFX, Gaming & Extended Reality: Approved by the Union Cabinet, this initiative aims to foster digital media innovation and skilled workforce development in the sector.
- International Film Co-Productions & Single-Window Clearance: India is signing co-production treaties with 15 countries and has streamlined the film-shooting approval process through a single-window clearance system, making it easier for international filmmakers to shoot in India.
Conclusion
While the government has made efforts to rationalize taxation and support the film industry, stakeholders continue to push for further relief and incentives to address challenges like declining cinema attendance and the survival of single-screen theatres. The upcoming Waves 2025 Summit and digital media initiatives are expected to provide a much-needed boost to India's entertainment sector.
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