Rate of tax: In the existing structure, when there is a transfer of right for a movie from producer to distributor, no tax was levied. However, with the introduction of GST, the following structure is followed.
In case it is a temporary transfer of right, the GST @ 12% is applied.
Whereas for a permanent transfer, which is considered as sale of movie, 12% rate is applied.
In existing tax structure, where the theatre is taken on rent by the distributor, distributor will sell ticket to general public and pay the taxes to concerned authorities along with rent to exhibitor. Where there is movie sharing agreement, exhibitor will sell tickets to general public and pay the taxes to concerned authority.
Under GST regime, following is the procedure which is to be followed:
The tax rate for the rent paid by distributor would be 18%. Whereas the tax rate for the sale of tickets would depend upon the cost of the ticket. Initially a flat GST of 28% was levied on all movie tickets, regardless of price. However, as per the meeting held on 11th June, 2017, the rates were revised, wherein tickets costing `100 and below were brought under the 18% slab, while those costing higher than `100 will continue to fall in the 28% slab. Local bodies can further tax cinemas, increasing the burden on ticket buyers.