Entertainment tax

Entertainment tax, also sometimes referred to as "amusement tax", is any tax levied on any form of commercial entertainment, such as movie tickets, exhibitions, sport events and more. The specific rules such as the tax rate and cases of tax exemption are subject to local authorities, as is their collection. The entertainment tax has in the most cases the form of indirect tax, which is levied on the buyer. Nowadays, the most discussed subject of those taxes are their implementations to online services, especially the ones working on a streaming basis such as Netflix, Spotify and others.

In India, the Entertainment Tax is a tax imposed by the government on feature films getting a wide release in the country and are reduced from gross collections, major commercial shows and big private festivals. The amount after deducting entertainment tax is known as net.

In Delhi, movie tickets, large commercial shows and large private festival celebrations may incur an entertainment tax.

Entertainment falls in List 2 of the Seventh Schedule of the Constitution of India and is exclusively reserved as a revenue source for the state governments. Historically, before India acquired independence, the British government imposed heavy taxes on the events of amusements and entertainment, where a large gathering of Indians could have caused rebellion or mutiny. Thus, various entertainment tax acts of the state governments permit the rate of tax beyond 100%. After independence, old enactments continued and there has been no revision or repeal of these acts.

This source of revenue has grown with the advent of pay television services in India. Since then, entertainment is being provided through the services such as broadcasting services, DTH Services, Pay TV Services, cable services, etc. The component of entertainment is intrinsically intertwined in the transaction of service, that it can not be separated from the whole transaction. Given the nature of transaction of service, it is being subjected to tax both by the Union and the State governments.

The fiscal principle underlying article 246 of the constitution of India separates the sources of taxation for the Union and the States and also maintains the exclusivity. This article also provides that in case of conflict between the powers of Union and the States, the Union power to tax shall supersede the power of the State to levy tax on the taxable event or in relation to the subject or object of taxation. Entertainment tax structure in India varies across states and is the highest in Uttar Pradesh at 60 per cent. In Maharashtra, entertainment tax was reduced by five per cent in 2005 and now stands at 45 per cent. There is no tax for Marathi films in Maharashtra, and in Tamil Nadu, Tamil films are tax free if they have a Tamil title and a U certificate from the Censor Board. Failing any of these, films are imposed a 15% tax.

The entertainment industry in India is facing the challenge of double taxation on such transactions. No State Entertainment Tax Applicable on Gross Tkt Value .

  1. Andhra Pradesh - 20% (15% for Telugu Films)
  2. Assam, Himachal Pradesh, Jammu & Kashmir, Rajasthan, Punjab and Uttaranchal (Nil)
  3. Bihar - 50.00%
  4. Delhi- 20.00%
  5. Gujarat -50.00% (Nil for Gujrati Films)
  6. Haryana -30.00%
  7. Jharkhand -110% (Nil for Jharkhandi Films)
  8. Karnataka -30% (Nil for Kannada Films)
  9. Kerala- 30.00%
  10. Madhya Pradesh -20.00%
  11. Maharashtra -45% (Nil for Marathi Films)
  12. Odisha -25.00% (for Odia Films 99% )
  13. Tamil Nadu -15% (Nil for Tamil Films)
  14. Uttar Pradesh -30% to 40%
  15. West Bengal- 30% (2% for Bengali Films)
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