Single GST rate on cinema exhibition, plead multiplexes

Close to 75% of the 8,500-9,000 screens in India are single ones i.e. 6,000 to 6,500

The goods and services tax (GST) cut for movie tickets below Rs 100 by the GST Council on Sunday has come as a breather for largely single-screen operators. From 28 per cent, this rate was reduced to 18 per cent.

Close to 75 per cent of the 8,500-9,000 screens in India are single ones i.e. 6,000 to 6,500.

Multiplex operators are disappointed. The revenue from tickets priced above Rs 100 is higher than that from tickets below Rs 100. While PVR and Inox Leisure, two of the country's leading multiplex operators, drive six to seven per cent of their revenue from movie tickets priced below Rs 100, for Mukta A2 Cinemas (from the Mukta Arts stable), the revenue from tickets priced below Rs 100 is 20 per cent.

Rahul Puri, managing director at Mukta A2, says: "The GST reduction should apply to all ticket prices. We believe the 18 per cent slab is the correct one for films anddo not see why tickets should be bifurcated this way."

Deepak Asher, non-executive director, Inox Leisure, said the impact on his company's business due to the rate revision on Sunday was negligible. He, too, argued the Council should have sought to bring GST rates for movie tickets in both categories at par.

Abneesh Roy, senior vice-president at Edelweiss Financial Services, says: "PVR derives about six per cent of its revenue from tickets priced below Rs 100. The lower rate would translate into a positive impact of Rs 6-8 crore only on its (operating) earnings, which is small."

While the number of multiplex screens in India is estimated to be around 2,500, the business has been growing. A Ficci-KPMG report this year says multiplex operators have been adding screens at a rate of eight to nine per cent annually, even as single-screen operators have been closing every year at the rate of three to four per cent.

"Even if the single-screen upgrades its infrastructure, it faces strong competition from nearby multiplexes in overall service quality and facilities. Another challenge is a limited exhibition of films. This is due to non-uniformity of terms with distributors," the report said, implying that tax rates should also take into account the interests of a growing sector.