4 days ago
Karnataka’s Proposed 2% Cinema Cess Draws Industry Opposition
Karnataka plans to add a 2% charge to movie tickets starting September 30.
Cinemas would collect this money from customers and give it to the government.
The Multiplex Association of India says the extra charge could make some people less likely to buy tickets.
If cinemas pay the charge themselves, they could earn less money.
The association also says GST would apply to the new charge.
It describes this as a tax being added to another tax.
For example, a ₹300 ticket would get a ₹6 cess before GST.
The cinema business has recently begun recovering after several difficult years following the pandemic.
MAI is asking the Karnataka Government to reconsider the measure.
Karnataka plans to impose an additional 2% cess on movie tickets from September 30.
The Multiplex Association of India says the levy could reduce ticket demand or cut exhibitors’ margins.
MAI says GST would also apply to the cess, creating what it calls a tax-on-tax effect.
The association says cinemas are recovering after five or six difficult years following the COVID-19 pandemic.
MAI has asked the Karnataka Government to withdraw or reconsider the proposed cess.
- Who
- The Karnataka Government, the Multiplex Association of India, and MAI president Kamal Gianchandani are central to the dispute.
- What
- Karnataka plans to levy an additional 2% cess on movie tickets, while MAI is opposing the measure.
- Where
- Karnataka, India.
- When
- The cess is scheduled to take effect on September 30; the articles do not specify the year.
- Why
- The government is proposing the levy, while MAI says it could raise ticket prices, weaken demand, reduce exhibitor margins, and result in GST being charged on the cess.
MAI and Cinema Exhibitors
Karnataka Government
Effect on consumers and cinemas
MAI and Cinema Exhibitors
MAI says the cess could increase ticket prices, reduce demand, or lower exhibitors’ margins if cinemas absorb the charge.
Karnataka Government
The Karnataka Government has proposed the levy, but the articles do not provide its stated response to MAI’s concerns.
Relationship with GST reforms
MAI and Cinema Exhibitors
MAI calls the measure anti-consumer and says GST on the cess would create a tax-on-tax effect without input tax credit.
Karnataka Government
The government’s position on the GST-related criticism is not provided in the articles.
Business environment
MAI and Cinema Exhibitors
MAI says the cess is being introduced as cinemas recover and conflicts with efforts to promote ease of doing business.
Karnataka Government
The government’s rationale for the cess and its view of the business-environment criticism are not stated.
Key facts
- Proposed levy
- An additional 2% cess on movie tickets
- Rollout date
- September 30; the year is not specified in the articles
- Collection responsibility
- Cinemas would collect the cess from customers and deposit it with the government
- Example impact
- A ₹300 ticket would incur a ₹6 cess, bringing the subtotal to ₹306 before applicable GST
- Industry concern
- The levy could reduce consumer demand or force exhibitors to absorb the cost through lower margins
- GST concern
- MAI says GST would apply to the cess and that exhibitors would receive no input tax credit for it
- MAI request
- The association has asked the Karnataka Government to reconsider or withdraw the measure
Quotes
Kamal Gianchandani
President of the Multiplex Association of India and an executive at PVR.
“The whole idea behind GST reform was to avoid tax on tax. Now if the state government levies a 2% cess, then there would be GST on this 2% cess, which means there will be tax on tax. We would get no input tax credit on this 2% cess, which defies the framework of GST.”
livemint.com
“No matter how small the tax is, it creates a negative precedent for other state. Karnataka is the first state which is levying a 2% cess on movie tickets. It sets a wrong example for other states to follow.”
livemint.com
Sources
Related news
Cinema Body Urges Karnataka To Reconsider 2% Ticket Cess
AP Theatre Decline Raises Concerns Over Prices, Licensing And OTT
Andhra Pradesh Seeks Unified Licences to Save Movie Theatres
Toxic Ticket Hikes Approved in Telangana and Andhra Pradesh
Telangana Exhibitors Seek Review of Cinema Ticket Pricing Order
Telangana Approves Ticket Hike and Special Show for The Paradise
Indian Consumption Looks Strong, but GST Signals Remain Mixed
GST 2.0 Quadrupled Indian Auto Retail Growth, Industry Says
CBI Arrests Absconding CGST Officer in ₹40 Lakh Bribery Case
Jairam Ramesh Says GST Cuts Offset by Inflation
GST Relief Is Being Eroded by Rising Prices
