Good news for movie lovers: GST on food and drinks in cinema halls reduced to 5%

cinema hall popcorn price

Theatre Food GST: Movie lovers often complain that the prices of popcorn, drinks and food items are high in cinema halls. They also argue that the high prices discourage people from going to the movies. The central government has given good news to cinema goers. It has announced that the tax on food and drinks sold in cinema halls will be reduced.

Currently, 18 percent goods and services tax (GST) is levied on popcorn, other food items and drinks sold in cinema halls. The government took a key decision on this in the 50th meeting of the GST Council. GST has been reduced from 18% to 5%. That means a 13 percent tax reduction.

Theatre Food GST Example:

For example, if you buy food and drinks worth Rs.500 in a cinema hall, you have to pay a total of Rs.590 including 18 percent GST of Rs.90. After the implementation of the new GST, you only need to pay Rs.525 at the rate of 5 percent GST. In this calculation, customers will save Rs.65.

Multiplex operators have welcomed the GST Council’s decision to reduce tax rates on food and drinks sold in cinema halls. They said it would help the theatre business recover after covid and avoid litigations.

The cinema industry, especially multiplexes, gets up to 35 percent of its revenue from food and beverages. The GST Council said that it has decided that restaurant service will be taxed as long as there is supply of food and beverages in cinema halls.

Tax is applicable if food and drinks are supplied as part of service in the cinema hall. If the movie tickets are booked together with food and drinks as a bundle, only the movie tickets will be taxed. The GST Council explained that the 5 percent tax will not apply to food and drinks.

PVR Inox CFO Nitin Sood said that the GST Council has given clarity that food and drinks sold in cinema halls will be part of ‘restaurant service’ and the film industry has welcomed the clarification that 5 per cent GST will be applicable. He said that this clarification will benefit more than 9,000 cinema halls and multiplexes in the country.