Under GST, taxes on cable, DTH & entertainment services to come down

NEW DELHI: Taxation on entertainment, cable and DTH services shall come down under the Goods and Services Tax regime as the entertainment tax levied by states has been subsumed in the GST, the Indian government said today.

The Finance Ministry in a statement said services by way of admission to entertainment events or cinematography films in cinema theatres will attract 28 per cent GST with effect from July 1. Currently, states impose entertainment tax of up to 100 per cent in respect of exhibition of cinematography films in theatres/cinema halls.

The GST Council has finalized 18 per cent tax rate on cable TV and DTH services.
Currently, these services attract an entertainment tax in states in the range of 10-30 per cent over and above the service tax levy of 15 per cent.

Under the GST regime, hardware equipment for both radio and television transmission and reception is expected to rise.
The rates on services by way of admission to entertainment events or cinematography films in cinema theatres is 28 per cent under the GST as compared to some states which have been charging as high as 100 per cent until now.

Thus, taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a panchayat (village administration) or a municipality.

The rate of GST approved by GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18 per cent ad valorem. Further, the GST Council has approved an exemption up to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the States.

Thus, entertainment services will be lower under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services. Presently, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods & inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs. Thus, while GST is a value added tax, entertainment tax, presently levied by the States is like a turnover tax.

Transmission and reception apparatus for both radio and television have been placed in the top category of 28 per cent of the four slabs of the GST. However, the rates may stabilize as taxes levied by states are subsumed in GST.

Other items coming under the 28 per cent slab are: single loudspeakers, mounted in their enclosures, Audio-frequency electric amplifiers, Electric sound amplifier sets, Parts; Sound recording or reproducing apparatus; and Video recording or reproducing apparatus, whether or not incorporating a video tuner.

Transmission equipment for radio or TV broadcasting reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video cameras recorders reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video cameras recorders also come under this slab.

Monitors and projectors, not incorporating television reception apparatus, reception apparatus for television, whether or not incorporating radio-broadcast receiver or sound or video recording or reproducing apparatus also fall in this category.

Meanwhile, BMR Advisors have said that the information technology sector needs to brace for increase in rates of tax under GST. However, effective planning of credits including on transition stock may aid the sector in mitigating this impact.

In information technology, both imported and domestically produced mobile phones come in the 12 per cent slab.

Shrink wrapped software product (on media) will attract tax rate of 18 per cent, as will Laptops, desktops, peripherals, parts, etc. Monitors and projectors (capable of connecting to ADP) will attract a rate of 28 per cent, while the majority of networking products will attract 18 per cent.

Temporary transfer or permitting the use or enjoyment of any Intellectual Property will attract a GST of 12 per cent.
In services, software services, that is development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software will attract 198 PER cent GST while Electronic supply of software will attract a tax of 12 per cent.

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