Like the end consumers, the Entertainment Industry will see a varied impact of GST implementation. Movie theaters and amusement parks saw either a positive or a negative impact depending on the state they are in.
GST Rates for Entertainment Industry:
- Film Producers:
- Non perpetual theatrical rights – 12%
- Sale of Rights (Perpetual) – 12%
- Non perpetual satellite rights – 12%
- In-film placement – 18%
- Non perpetual Music rights – 12%
- Film Distributors:
- Lease to exhibitors and theatres – 12%
- Theatres – 28% + Local levy
- TV and Radio channels:
- Lease of programs – 12%
- Artists, Technicians and Directors – 18%
- Amusement Parks – 28%
- Entertainment Events – 28%
- Sports events like IPL – 28%
- Circus, Concerts of classical dance as well as folk dance, theatrical performance and drama – 18% (exemption up to consideration for admission of Rs. 250 per person)
- Cable TV or DTH Services – 18%
- Television and other content Producers:
- Outright Sale – 12%
- Print Media – 5%
- Renting of hoardings – 28%
- Subscription Revenue – 12%
The Good for Entertainment Industry:
Availability of ITC:
ITC is now available on the services like catering, renting of premises for movie halls, security costs. These were not available under the pre-GST regime. So, producers can adjust the input GST paid when renting a premise with the output GST from selling tickets.
Exit of Entertainment Tax:
The Bad for Entertainment Industry:
Power provided to Municipality to tax entertainment and amusement:
Under GST, local governments can charge and collect taxes on entertainment and amusement. Someone involved in movie making cannot adjust the GST paid and it becomes an additional levy. The state of Tamil Nadu has levied such tax on film tickets thereby naking the tax burden heavier than before. Film distributors and theater owners are on a strike to oppose this levy as it kind of beats the concept of One Nation One Tax.
Theatrical rights of films taxable:
The theatrical rights of films were not liable for VAT or Service Tax. Now, sale or lease of all the rights will attract GST. For the entertainment industry, the tax burden will increase in this aspect. The level of credit will depend on the inputs of goods and services used by the producers and whether they are being acquired from a registered dealer. Food, beverages, etc., which form a major part of the production cost will not be entitled to ITC due to specific provisions.
Lapse of Cenvat Credit:
In case of a film producer or a television content producer, GST is 12%. The rentals and services provided by artists, technicians and other persons form a major portion of input in a film or a TV. These attract 18% GST. Major inputs are taxed at 18% GST but the output is charged at 12%. Therefore, ITC paid will remain unutilized and may have to be written off. In case of TV series, ITC may remain unutilized.
In the entertainment industry, a large section suppliers or service providers may not be registered under GST. Purchases from them will attract GST which will the buyer will have to pay. The compliance cost as well as the basic cost of input will increase as service providers have to provide GST compliant invoices. Services by an author, music composer, photographer, artist or like by way of transfer or permitting the use of enjoyment of copyright covered under section 13 (1)(a) of the Copyright Act, 1957 are now subject to Reverse Charge by notification date 28th June. The Reverse Charge Mechanism has been deferred until March 2018.
Impact on Event Organizers:
Compulsory GST registration of Event Organizers selling tickets online:
E-Commerce Operators have to collect TCS from the sellers on their platforms. So, any Event Organizer that sells tickets online will have to obtain a registration under GST – irrespective of their turnover. TCS is collected on the base value of the supply which is equal to the cost of the ticket minus the GST applicable. Organizers will pay this to the government by the 10th of the succeeding month. GST is applicable at the rate of 2%. Event Organizers can claim credit of TCS against the output GST liability.
Responsibility of an event organizer selling tickets online:
1) An Event Organizer has to register and provide the GSTIN to the online platform where you are selling tickets.
2) Before listing an event on any platform, the Event Organizer must provide a billing address for the event and location of the event. In this way, the E-Commerce operator can collect appropriate TCS and comply with GST Provisions.