No cheap thrills? Movie tickets GST cut to benefit small-town cinemas, multiplexes to miss out

The decision to reduce tax on tickets priced below Rs 100 is a welcome move but would only benefit cinemas in smaller markets, Sanjay Barjatya, CEO, Roongta Cinemas, told Moneycontrol.

At multiplex chains, only 5-10 percent of the tickets are priced at Rs 100 and that too during promotional events.

At his cinemas, Rs 100 tickets accounted for only around 8.5 percent of the business, Barjatya said.

"For cinemas in metros where ATP (average ticket price) is over Rs 200, this will not make any difference. The impact will be felt by single screens in Tier 2, 3 cities. Multiplexes have annual ATP of over Rs 200 in markets like Adipur, it is Rs 220 in Ghaziabad and Rs 280 in Delhi. I see no impact as I operate in Tier I cities where ticket prices are above Rs 100," he said.

Top multiplex chains like PVR INOX last year had reported an ATP of Rs 259 in FY25.

Even in states like Tamil Nadu, where there is a cap on movie tickets, single screens are premium and tickets are priced at Rs 150 or more.

For a country that has an ATP of Rs 140 what kind of impact can GST reduction on movie tickets priced below Rs 100 can have? Vishek Chauhan, owner of Patna’s Roopbani Cinema, single screen theatre, said.

"Cinemas that operate below Rs 100 are few in number and those cinemas are not frequented by audiences. So in terms of footfalls, occupancies, collections, we are not going to see any big movement," Chauhan said.

Little GST relief

Karan Taurani, executive vice president, Elara Capital, expects footfalls to grow 10-15 percent on due to revised GST. He did add that it is content and not ticket prices that bring audiences.

The impact of lower taxes will only be felt by single screens but not many people would opt for them just because of the Rs 15-20 price drop, he said. "A very selective audience, maybe just 5 percent will move to single screens due to lower ticket prices," Taurani said.

Chauhan said there are 9,000 screens but the contributing screens are not more than 7,000 screens. "The GST cut will have an impact on the non-performing dead cinemas. Cinemas operating below Rs 100 their contribution to the exhibition industry is negligible. To occupy a space in the middle of town with air conditioning, laser projection, and selling movie tickets at Rs 50-70 is not possible, exhibitors won't be able to break even," he said.

If the Rs 100 slab was increased to Rs 200, the impact would have been sizable.

"On Rs 200, 5 percent GST would have had positive impact on the industry, investors as well as the audience. Ticket prices would have become cheaper. It would have had a positive impact on non-national chains. We urge the government to reconsider the slab of Rs 100 which is 7-8 years old. There is a substantial increase in input cost right from food, wages, etc," he said.

What exhibitors want

If the bracket is moved to Rs 250 then there will be a huge change in terms of footfalls which remains 15-20 percent lower than pre-Covid level, Chauhan added.

The Multiplex Association of India (MAI) had recently proposed a 5 percent GST on tickets priced up to Rs 300. India has a headroom to grow to at least 20,000 screens, Kamal Gianchandani, President, Multiplex Association of India (MAI) had told Moneycontrol, adding GST rationalisation would fuel screen growth in the country.

If taxes were lowered for high value tickets, it would have been beneficial to both cinemas and audiences, Barjatya said.

"If the 18 percent GST on movie tickets priced above Rs 100 would have come to 12 percent then it would have been a game changer," he said.

Affordability of movie tickets has been a long standing debate and many multiplexes are offering more discounts with special days like National Cinema Day with tickets at Rs 99 or discounts on weekdays to boost footfalls.

PVR INOX has been generating footfalls with promotional offers as well as food and beverage with Cinema Lovers Day, with tickets at Rs 99 for standard seats and Rs 199 for premium and recliners, and Senior's Day every Monday, among others.

But Chauhan thinks that even for such offers, the lower GST would be passed on to consumers. "May be on a National Cinema Day ticket prices can go from Rs 99 to 89 but I don't think national cinema chains would pass on the benefit to customers but it could lead to more promotional offers for the audience."