Early this week, the Delhi government had slashed entertainment tax by 10%, reducing it to 20% from the earlier 30% following the plea of Multiplex Association of India (TMAI). Buoyed by this success, the association is now set to meet finance ministers of different states in the next two months to put forward a case to subsume entertainment tax (e-tax) under goods and services tax (GST) regime.
The multiplex industry body has already met Asim Dasgupta, chairman, empowered committee of state finance ministers to hear their demand. According to Atul Goel, chairman, TMAI, and MD e-city ventures, owing to varied tax structure in the states (ranging between 15-50%), the development of cinema infrastructure has been distorted and disproportionate across space.
The e-tax on Hindi content varies from around 5% in Kerala to 50% in Punjab, Madhya Pradesh, Rajasthan and Uttar Pradesh. Investments in new cinemas and their refurbishment are directly co-related with the entertainment tax structures. Hence, for equanimity, it is important to have a uniform tax structure and the same has also been advocated by the information and broadcasting (I&B) ministry, in several instances, said Goel.
Due to lower entertainment tax in Tamil Nadu (no e-tax on Tamil content) and Andhra Pradesh (15% tax on Telugu content), there has been large-scale investment in cinema infrastructure in these two states. The two states account for 41% of total theatres in the country. TMAI has urged the joint working group on GST to include e-tax under GST regime to be ushered in by 2010, which can impose a uniform structure of tax across states to facilitate a common market for cinema infrastructure.
Internationally, more than 120 countries have put the taxation on purchase of cinema tickets under the GST regime. According to TMAI, there are indications that amusement parks, private health would fall under GST, and therefore, e-tax should also be considered for the same. Goel said, ?The reaction of the chairman has been very positive. But since the committee works on a consensus, we want to ensure adequate understanding and representation for our case.?