Multiplex operators welcomed Tuesday’s decision by the Goods and Services Tax or GST Council to reduce food and beverage tax rates sold in cinema halls, saying it will help in the revival of the theater business post-Covid and avoid litigations.
The Council, headed by the Union finance minister and consisting of representatives of all states and UT’s, on Tuesday decided to lower the service tax levied on food and beverages consumed in cinema halls to 5% from 18%.
Food and beverages are one essential part of the cinema exhibition industry, particularly the multiplexes, they are a major source of income as they earn up to 35% of their revenue from this segment.
PVR INOX Ltd. Chief Financial Officer Nitin Sood said: “The entire cinema industry welcomes the clarification issued by the GST Council today that food and beverages sold at the cinemas will get covered under the definition of ‘restaurant service’ and would be liable to GST at 5% (without availment of input tax credit).”
“The above clarification will help resolve the industry-wide issue for the sector which includes more than 9,000 cinemas across the country in avoiding disputes/ litigation from a GST standpoint, giving tax certainty and help in the revival of the theater business post-pandemic,’ he added.
The decision was taken at the 50th meeting of the GST Council, which was chaired by Finance Minister Nirmala Sitharaman on July 11. The reduction in tax on food and beverages served in cinema halls is likely to come into effect from July 25, 2023.
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