The GST Council, headed by Union finance minister Nirmala Sitharaman, held its 50th meeting on Tuesday, and came up with several key decisions. One such decision was a clarification regarding the tax on food served in cinema halls, which it said, was fixed at 5%.
According to CNBCTV18, the Multiplex Association of India had appealed for a reduction in the tax on food services in cinema halls. Their representation to the GST Council came after confusion arose due to reports of theatres receiving ‘notices’ regarding the GST being imposed by them, the report said.
What does ‘5% tax’ mean?
At present, movie tickets priced above ₹100 are taxed at 12%, and those above ₹100, at 18%. Therefore, when theatres offer moviegoers an online combo option of the food and the film, the GST will be on the total amount, and will, therefore, be taxed at 18%.
The 5% GST, on the other hand, is applicable when the food is brought separately from the movie ticket, at the cinema hall itself. To avoid the higher GST, therefore, industry experts advise customers not to pre-book their snacks.
‘Food and beverage account for almost half of the ticket price’
According to Nitin Sood, CFO, PVR Inox, the food and beverage (F&B) alone account for almost up to 52% of a film’s ticket price.
“Cinema average F&B spend today is approximately 50-52% of average spending on a ticket by a consumer. And there is no reason this number should not be higher. In the Western countries, we have seen this ratio as high as 70-75% as well. And, that is our aim that over the next few years, to increase the overall F&B consumption at cinemas,” Sood told CNBC TV18.
