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Taxation of Media and Entertainment Under GST

By Annapoorna

Updated on: Oct 23rd, 2024

4 min read

As a finance leader in this fast-paced industry as media and entertainment, navigating the evolving taxation landscape has turned out to be more complex. In media and entertainment, margins are often tight and consumer preferences transform rapidly. You're likely asking: How has GST reshaped taxation for media and entertainment? What are the specific implications for digital content? And how does this impact the operations and bottom line of your business?

Understanding these changes isn't just about compliance—it’s about seizing opportunities to optimise your tax strategy! In this article, we’ll guide you through how taxation has evolved from the pre-GST era, delve into the current GST framework and GST rates, while addressing the specific nuances of digital content taxation. You’ll get a clear understanding of how GST affects various facets of media and entertainment, allowing you to make informed decisions for your business.

Here’s what we’ll cover:

Taxation under Pre-GST or VAT regime
Taxation under GST regime
Applicability of GST on Online Supplies of Digital Content (Music, Movies, Television Shows, etc.)
Impact of GST on Different Activities in the Media & Entertainment Industry

Taxation under Pre-GST or VAT regime

Entertainment Tax under Pre-GST regime

State	Entertainment Tax
Jharkhand	110% (Nil for Jharkhand Films)
Bihar	50%
Maharashtra	45% (Nil for Marathi Films)
Uttar Pradesh	30% to 40%
Haryana	30%
Kerala	30%
West Bengal	30% (2% for Bengali Films)
Karnataka	30% (Nil for Kannada Films)
Rajasthan	30% (Nil for Rajasthani Films)
Orissa	25%
Delhi	20%
Gujarat	20%
Madhya Pradesh	20%
Andhra Pradesh	20% (15% for Telugu Films)
Tamil Nadu	15% (Nil for Tamil Films)
Assam, Himachal Pradesh, Jammu & Kashmir, Punjab and Uttaranchal	Nil

Service Tax under Pre-GST regime

Tax Rate	15%
Abatement	60%
Effective Rate	15% x 40% = 6%

Total Tax under Pre-GST regime

VAT ( Assumed)	14.5%
Service Tax	6%
Total Tax	20.5%

Taxation under GST regime

Time of Supply

Time of supply of services is the earliest of the following:

Date of issue of invoice
Date of receipt of advance/payment.
Date of provision of services (if invoice is not issued within prescribed period)

Time of Supply under Reverse Charge

In case of reverse charge, the time of supply for service receiver is the earliest of the following:

Date of payment (For services only)
30 days from date of issue of invoice for goods (60 days for services)

Place of Supply

Place of Supply of Goods

In case of sale of food & food products in a movie hall, the place of supply is the movie hall itself.

Place of Supply for Services

Place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is not available, the location of the service provider will be the place of provision of service.

Place of Supply at Movie Halls

Place of supply is place where the service are actually performed. i.e., movie hall itself.

Place of Supply in Events

Nature of Supply	Place of Supply
Admission to an event or amusement park or any other place. Services ancillary to above	Place where the event is held or place where the amusement park is located
Entertainment events and services ancillary to the above	Supply to: Registered person – Location of the registered person Unregistered person – Location of the event.

Value of Supply of Goods and/or Services

The amount collected by the seller / service provider from the buyer or service recipient respectively is the value of supply.

Applicability of GST on Online supplies of Digital Content (Music, Movies, Television Shows, etc.)

Online supplies of Digital Content (Music, Movies, Television Shows, etc.) are known as OIDAR i.e. Online Information Database Access and Retrieval services.

Case 1: Both Service Supplier and Service Recipient are in India

GST @ 18% i.e. the Service Supplier should be registered in India and shall collect GST@ 18% from the Service Recipient.

Case 2: Service Supplier is outside India and Service Recipient is in India

Place of supply would be India The manner of levy of GST on such transactions would depend on whether the Service Recipient is a Business or is a Consumer i.e. Non-Business.

I. Service Recipient is a Business entity registered under GST

The service recipient is liable to tax under the Reverse Charge Mechanism.

II. Service Recipient is not registered under GST

Service provider would also be required to get registered in India under the GST Law, collect GST from the service recipient and then deposit GST with the Govt.

Impact of GST on different activities in Media & Entertainment Industry

Exhibition of Movies

Pre-GST	GST
Sale of Movie tickets: No VAT or Service Tax State specific Entertainment tax ranging from 15% to 110% (average of 30%)	Sale of Movie tickets: Where price of tickets is Rs.100 or less: 12% GST Where price of tickets is more than Rs.100 : 18% GST
Television: No VAT Service Tax @ 15% Entertainment tax on broadcasting services (D2H / Cable TV services): 8-12%	Television: GST on broadcasting services (D2H / Cable TV services): GST at 18%
No set off for Entertainment Tax against Service Tax or VAT paid on procurements. Burden of taxes ultimately on customer.	Authority given to local bodies to levy and collect taxes on entertainment and amusement.

Impact

Since entertainment tax is subsumed under GST now, the overall tax burden on consumers has reduced.

Food and Beverages at Movie Halls

Pre-GST

GST

Dual levy of VAT and Service tax VAT @ 20.5% (Assumed) and Service tax @ 15%

If supplied by way of or as part of a service and supplied independently of the cinema exhibition service, then at the rates applicable to restaurant services - 5% GST without ITC

If clubbed together and the same satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to the service of exhibition of cinema, the principal supply - 18% or 28% GST, as applicable

Taxation of Food and Beverages in Movie Theatres

Circular No. 201/13/2023-GST on 1st August 2023 clarified food and beverages are supplied independently of the cinema exhibition service. These are treated as restaurant services and taxed at 5% GST. If these sales are bundled with the cinema exhibition service (included in the ticket price), it would be considered as composite supply, and the entire supply would attract GST at the higer rate that applies to cinema exhibition.

Impact

VAT and service taxes subsumed under GST has reduced tax burden on end consumer.

Film Distribution

Pre-GST	GST
Transfer of copyright for exhibition of movies in Theatre: Service Tax on temporary transfer of copyright relating to cinematograph films for exhibition in a cinema hall or theatre. Increased burden on producers on procurement of services for service tax charged by actors, technicians etc.	Transfer of copyright for exhibition in Theatre: Treated as supply of services GST rate of 18% (Increased from earlier 12%)
Transfer of copyright for exhibition on Television: Issue of dual levy of Service tax and VAT on transfer of copyright for exhibition on television due to confusion in classification of the activity as a sale of goods or services	Transfer of copyright for exhibition in Television: Treated as supply of services GST rate of 18% (Increased from earlier 12%)
IPR such as trademarks, copyrights were also treated as goods and attracted state VAT	Transfer of Intellectual Property (IP) right in respect of Information Technology software: GST at the rate of 18%

Impact

No issue of dual levy of Service tax and VAT on transfer of copyright for exhibition on television Reduced tax burden on Producers

Services rendered by Artists and other technicians

Pre-GST	GST
Services rendered by Artists: Service tax @ 15% on forward charge basis	Services by an artist by way of a performance in folk or classical art forms such as music, dance, or theatre, and the consideration charged for such performance is not more than Rs.1,50,000 - Nil In other cases or if the service provided by such artist is as a brand ambassador - 18% GST
Services rendered by technicians like composers, photographers: Service tax @ 15% on forward charge basis	Supply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use of a copyright - 18% GST on reverse charge basis

Impact

Increased tax rate under GST on services rendered by Artists While burden on technicians like composers, photographers is nullified, burden on producers has increased due to reverse charge tax under GST

Sponsorship and Brand Promotion

Pre-GST	GST
Liable to service tax @ 15%	Liable to GST @ 18%

Impact

Increased tax rate under GST.

Pre-GST	GST
Print media: Exempt from service tax Others: Service tax @ 15%	Print media: GST @ 5% Others: GST @ 18% Availability of input tax credit on the taxes paid on the advertisements

Impact

No tax exemption to print media. However input credit is available on services received Increased tax rate under GST for advertisement media other than print media

Amusement Parks

Pre-GST	GST
State specific Entertainment tax ranging from 15% to 110% (average of 30%) No VAT or Service Tax	GST at 18%

Impact

GST is beneficial for states with a high entertainment tax. It has adverse effect on states which already have a low entertainment tax.

Elimination of dual tax levies of service tax and VAT on various transactions and applicability of GST through supply chain should allow the producers and studios to set off the taxes, thereby significantly reducing costs.

In addition to GST, local authorities of a few states such as Maharashtra are levying a LBET, i.e. Local Bodies Entertainment Tax ranging from 10 to 25% on movies, cable TV and DTH services. These additional taxes by local bodies appear to be a backdoor entry of entertainment tax and if continued to be levied by local authorities, would decrease the operating margins and profits for the industry and thus would increase the cost to consumers. The entertainment industry has both positive and negative impact on state to state basis.

For those states having high entertainment tax, GST will be beneficial as it will reduce the prices for the end consumers. However, GST will have a negative impact on those states which already have a low entertainment tax. Overall, GST will help the industry to grow and flourish with increased digitization and access to data services at lower costs.

About the Author

Annapoorna

Assistant Manager - Content

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

Quick Summary

Navigating the evolving taxation landscape in the media and entertainment industry can be complex for finance leaders. This article discusses the impact of GST on taxation for digital content, operations, and the bottom line. It covers pre-GST and GST tax regimes, implications for online supplies of digital content, and the impact on various industry activities.