The 50th meeting of the Goods and Services Tax (GST) Council which is scheduled for today (11/07/2023) may discuss a proposal to reduce the taxes on certain categories of food and beverages (F&B) sold inside cinema halls from the existing 18% to 5%.
The Multiplex Association of India (MAI), is an industry lobby group representing cinema owners much awaited for this drastic change. The MAI collaborates with regulatory bodies and industry stakeholders to represent the issues faced by the exhibition sector and highlight both the opportunities and challenges.
It was focused to meet the concern of some of the members of MAI on the difficulties after the local authorities mandated 18% taxes on F&B in certain states and towns. This demand contradicts the categorization of F&B inside cinemas as restaurant services, which should be 5%, according to the GST Council’s guidelines.
Cinema theatres across India levy a 5% rate on F&B since GST was introduced. However, in the past 12-15 months, some cinemas received notice from local bodies that F&Bs in cinemas can’t be treated as restaurant services.
F&B is one of the most significant sources of revenue for cinema owners and lower or flexible pricing will lead to better financial access to theatres for audiences.
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The Cut down Rate of F&B tax would help to increase the audience’s access to the theatre by reducing the expense. The cost of the movie-going experience will come down and any rebates or subsidies will only make the sector healthier.
“The cinema halls have full rights to manage their affairs regarding fixing the terms and conditions related to Food and Beverage prices inside the premises of a theatre. Movie watching experience increases with having food along with it. Popcorn is the most enjoyable snack while watching a movie, but people complain about it as it is becoming an expensive affair. Buying food in the cinema has now been out of the common man’s reach as the price seems to increase every other day.”, the Supreme Court held.
While considering the massive rent and maintenance costs for theatre owners, the rebate would help to increase their profit. Media and entertainment industry experts point out that “Bollywood continues to lag behind pre-covid levels despite cinemas operating at full capacity for more than a year now after the lifting of pandemic-induced curbs. The film business in the Hindi-speaking market is nearly 40% less than the pre-covid levels and the first half of 2023, which clocked in about ₹1,900 crores in the Hindi belt, has seen only one notable Bollywood hit in Shah Rukh Khan’s Pathaan.”
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