A Treat for Your Senses: Cinema Industry Cheers as GST on Theater Food Drops

Date : 13/07/2023
Read: 3 mins

Lights, Camera, Discounts! What's the Exciting News about Lower GST Rates on Delectable Theater Food in the Cinema Industry?

Theatrical Treats Get Sweeter with Reduced GST

Get ready for some exciting news in the world of cinema! Multiplex operators are rejoicing as the GST Council has made a significant decision to reduce tax rates (from 18% to 5%) on food and drinks (F&B) served in movie theatres. This move has been welcomed with open arms by the cinema industry, as it not only paves the way for the revival of the theatre business post-Covid but also helps in avoiding potential litigations. This means that moviegoers can now enjoy their favourite snacks and drinks at a more affordable price, enhancing their overall cinema experience. This article delves deep into the implications of this decision and how it will shape the future of the cinema industry.

GST rate cut on theatre food
GST Council classifies F&B as 'restaurant service'
Clarification will resolve disputes and litigations
Will help in post-pandemic recovery of theatrical busines

GST council notification’s highlights and its impact

The highlights of GST council’s notification with respect to F&B sold at movies is given below:

GST council has reduced the GST rate on food served in cinema halls to 5% from 18%. The stock markets too reacted positively with PVR and INOX shares gaining after the GST cut on food and beverages.
Food and beverages (F&B) are a significant source of revenue for the cinema industry, with multiplexes earning up to 35% of their revenue from this segment.
The multiplex industry has welcomed the GST Council’s decision to classify food and drinks sold at movies as ‘restaurant service’ and subject them to a 5% GST, resolving recent disputes and litigation.
The cinema industry is pleased with the GST Council’s clarification that food and beverages sold at cinemas will be classified as ‘restaurant service’ and subject to a 5% GST.
This clarification will help resolve disputes and litigation for the cinema industry, providing tax certainty and aiding in the post-pandemic recovery of the theatrical business.
If cinema tickets and F&B are bundled together and meet the criteria for a composite supply, the entire supply will attract GST at the rate applicable to the exhibition of cinema, the principal supply.

Also Read: How GST changes everyday life

Were there any additional decisions taken by the GST council?

Additional decision taken are mentioned below:

The Council has approved the exemption of GST on the import of cancer drug Dinutuximab and Food for Special Medical Purposes (FSMP) used to treat rare diseases.
The Council has agreed to levy a 28% tax on online gaming, casinos, and horse racing, with the tax being applied to the full face value.

Also Read: GST recovery – Get the GST paid on the under-construction property back if the deal is cancelled

The reduction of GST rates (18% to 5%) on food and beverages served in movie theaters is a positive move welcomed by the cinema industry. This decision not only ensures tax certainty and resolves ongoing disputes and litigation, but also provides a boost for the post-pandemic recovery of the theatrical business. Moviegoers can now enjoy their favourite snacks at a more affordable price, enhancing their overall cinema experience.