Know what is entertainment tax, history, implementation and contribution. Find tax rates in various states. The rates may vary from state to state. Some states are tax-free. Read the complete article to know more information.
In India, Entertainment tax is levied on every financial transaction that is related to feature films getting a wide release. This tax may incur on Movie tickets, large private festival celebrations, and large commercial shows. These are reduced from gross collections. The amount after deducting the entertainment tax is known as a net value. Entertainment is included in the List 2 of the 7th Schedule of the Constitution of India. It is entirely reserved as a revenue source for the state governments.
Coming to the history, before independence the British government has imposed heavy taxes on the events of entertainment and amusements because there could be a rebellion or mutiny due to the large gathering of Indians. Thus, various acts of the state governments permitted the tax rate on entertainment beyond 100%. After independence, these old laws continued in some states and there has been no repeal or revision of these acts.
Contribution of Entertainment Tax:
The states have started to generate the high revenue with the advent of paid television services in India. Entertainment is being provided through various services such as DTH Services, broadcasting services, cable services, Pay TV Services, etc.
Some other forms of entertainment that are liable to entertainment taxes are:
- Video games.
- Amusement parks.
- Celebrity stage shows.
- Sports activities.
Entertainment Tax Rates
Tax rates of entertainment in India is different for different states. The highest tax is in UP (Uttar Pradesh) that is Entertainment tax in UP is at the rate of 60%. In Maharashtra, it was reduced by 5% in 2005 and at present the rate is at 45%. The Marathi films are tax-free in Maharashtra. In Tamilnadu, Tamil films have no tax if they have a ‘U certificate from the Censor Board’ and ‘Tamil title’. On failing any of these, films are imposed with a 15% tax. Refer below table for tax rates of all other states in India.
|S.No||State Name||Tax Rate|
|1.||Andhra Pradesh||20% (15% for Telugu Films)|
|4.||Delhi||Entertainment Tax in Delhi is @ 20%|
|5.||Gujarat||20% (Nil for Gujarati Films)|
|8.||Jammu & Kashmir||Nil|
|9.||Jharkhand||110% (Nil for Jharkhand Films)|
|10.||Karnataka||30% (Nil for Kannada Films)|
|13.||Entertainment Tax in Maharashtra||45% (Nil for Marathi Films)|
|16.||Rajasthan||30% (Nil for Rajasthani Films)|
|17.||Tamil Nadu||15% (Nil for Tamil Films)|
|19.||Uttar Pradesh||30% to 40%|
|20.||West Bengal||30% (2% for Bengali Films)|
State governments are mainly responsible for collecting the entertainment taxes in India. However, based on the type of transaction, the union government can also collect these taxes. As per Indian Constitution, the basic financial principle, that separates the taxes to be collected by ones under the jurisdiction of the state government and the union government, is mentioned in the Article 246.
This part also shows the entertainment taxes that can be collected by the state governments and union governments. The article 246 also states that, if there is a conflict regarding tax on entertainment between the State Governments and the Union Government, the Union Govt will have greater power in imposing the tax.