Priya Aditi
The GST Council, led by the finance minister of the Union, Nirmala Sitharaman, held its 50th meeting on Tuesday and made a number of important decisions, One of these decisions was a clarification regarding the fixes at 5% tax on food served in cinemas.
The Multiplex Association of India had requested that the tax on culinary services in movie theaters be reduced. According to the report, their representation to the GST Council occurred after confusion arose due to reports of theatres receiving ‘notices’ regarding the GST that they were imposing.
What does ‘5% tax’ mean?
Currently, movie tickets priced over 100 are taxed at 12%, and those priced over 200 are taxed at 18%. Therefore, when theaters offer customers an online combo option for food and a movie, the GST will be applied to the total price and will be taxed at 18%.
The 5% GST, on the other hand, is applicable when food is purchased at the theater separately from the movie ticket. To avoid the increased GST, industry professionals advise consumers not to pre-order snacks.
Food and beverages account for nearly half of the price of admission.
According to Nitin Sood, CFO of PVR Inox, food and beverages (F&B) alone account for up to 52 percent of the price of a movie ticket.
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Consumers spend approximately 50-52% of their average ticket price on food and beverages. And there is no reason for this number not to be greater. This ratio has been as high as 70-75 percent in Western countries. And it is our intention, over the next few years, to increase the overall food and beverage consumption in movie theaters.
