GST Council reduces tax rates from 18% to 5% resulting in cheaper popcorn and drinks at movie theaters

Moviegoers may now anticipate less expensive popcorn and cold drinks as a result of the Goods and Services Tax (GST) Council’s decision to reduce the service tax assessed on food and beverages consumed in movie theaters from 18% to 5%.

The Goods and Services Tax (GST) Council, led by the Union finance minister and made up of representatives from all states and UTs, decided to lower the service tax levied on food and beverages from 18% to 5% on Tuesday, much to the delight of moviegoers.

The food and beverage sector is a significant source of revenue for the movie-going business, particularly for multiplexes, which can derive up to 35% of their income from it.

The Center’s decision has been praised by multiplex owners as well, who claim it will help them resurrect their businesses after the epidemic.

The statement was quoted by news agency PTI as saying, “The entire film industry welcomes the clarification issued by the GST Council today that food and beverages sold at the movies will be covered under the definition of “restaurant service” and will be subject to GST @5% (without availing of input tax credit).

“The above clarification will help resolve the industry-wide issue for the sector, which includes more than 9,000 cinemas across the country in avoiding disputes/litigation from a GST standpoint, giving tax certainty, and helping in the revival of the theatre business post-pandemic,” he continued.

After the epidemic, the movie theater business struggled as it was forced to close in 2020 and reopen with limited limitations. They were finally given permission to work at full capacity in March 2022, and content pipelines began to flow.

The Council has also voted to tax internet gambling, horse racing, and casinos at a rate of 28% of their total value.