UP to reimburse SGST on movie tickets: Here's how state policies are helping the film industry

When India moved to the unified tax regime with the Goods and Services Tax (GST), entertainment was categorised as a luxury putting movie tickets under the highest tax bracket.

While the government did tweak the structure and brought the GST rate to 18 percent for movie tickets costing up to Rs 100, the industry called the relief too little.

Some state governments are however lending a helping hand to the movie industry by reducing taxes, providing financial support and making their states a hub for movie making.

One such state is Uttar Pradesh that in its recent cabinet meeting on November 20 announced to reimburse the state GST imposed on movie tickets from July 2017.

The Yogi Adityanath government has given relief of the state GST component on cinema tickets across the state that is nine percent for tickets costing up to Rs 100 tickets and 14 percent for tickets above Rs 100.

GST has three tax components -- Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) and Integrated Goods and Services Tax (IGST).

Both CGST and SGST are levied on any service or product to ensure both the state and the Centre receive their revenue. This applies for movie tickets too.

The UP government has decided to reimburse the state share of the GST. For tickets up to Rs 100, tax levied is 18 percent out of which state GST share is nine percent. Total GST on movie tickets over Rs 100 is 28 percent out of which state GST share is 14 percent.

This is not the first time when the UP government has taken measures to help the movie industry. Earlier this year, UP announced its film policy under which the state will provide financial assistance of Rs 1 crore to films that have shot 50 percent of the movie in the state.

If 66 percent of the movie is shot in the state, Rs 2 crore will be provided as financial assistance. Additional benefit of Rs 25 lakh will be given to those films that have five main actors from UP while Rs 50 lakh to films that have all the actors from the state.

Films that complete their production and post-production in the state will get extra benefit of Rs 50 lakh.

If a director shoots his next film in UP, the benefits would increase by up to Rs 1.25 crore if 50 percent of the movie is shot in the state. The benefits would increase to Rs 2.25 crore if more the director shoots more than 66 percent of this movie in the state.

During the policy announcement, it was also said that three years of GST will be reimbursed for those who open a multiplex.

Apart from UP, other states are also putting their best foot forward to support the film industry. After the introduction of GST, the film industry had feared the levy of Local Body Taxes (LBT) which meant an additional burden.

In Tamil Nadu, the state reduced the entertainment tax from 10 percent to 8 percent on Tamil films, to give some relief to theatre owners.

To change the face of the state’s movie industry, the Haryana government recently undertook a number of measures. It approved the Haryana film policy, which will accord filmmaking the status of an industry.

The Haryana film industry can would now be able to enjoy benefits available under the state’s Enterprise Promotion Policy.

According to the policy, 50 percent of the state's total budget will be granted to Haryanvi language films. However, not more than 12 films will be given financial assistance in a year. Also, a film will not be able to avail more than one financial benefit.

While dual taxes (GST and LBT) are proving to be a disappointment for the film industry, state policies are coming to the film sector’s rescue.