Going to the theatre to watch the latest movie or to the stadium to cheer for your favourite cricket team seems like a good weekend plan. However, did you know you must also pay entertainment taxes on these tickets? This compulsory tax liability is payable over and above the ticket’s asking price.
Wondering if an entertainment tax is direct or indirect? How is it collected? How much do you have to pay? Keep reading to find the answers to these questions.
Entertainment tax is an indirect tax applicable to all commercial entertainment activities like film and music festivals, classical shows, cricket matches, etc. The government imposes this tax to collect revenue from such activities, which is used for the entertainment sector's general development.
Entertainment tax in India has a colonial legacy since the concept was introduced during British Rule to limit public gatherings. In post-independent India, entertainment tax has been subsumed in the Indian constitution. Article 246 outlines the provisions for entertainment tax administration and collection.
Here are some of the prominent features of the tax:
*Celebrity stage shows
*20% of their basic salary
*Actual entertainment allowance amount received during the fiscal year.
As mentioned earlier, before GST was introduced, entertainment tax in India varied from state to state. Tax rates ranged from 0%-110% depending on the concerned state’s tax policies. Here’s a list of the applicable entertainment tax rates in some of the Indian states:
These high taxation rates made entertainment activities unaffordable to most of the Indian population. However, this has changed with GST subsuming entertainment tax within its purview. Now, the following uniform tax rates apply to various entertainment sources:
*Note: Some Indian states charge additional taxes over and above this set GST rate.
The impact of GST on the entertainment sector has been far-reaching. For the end-customer or movie-goers in states like Jharkhand, where the prior taxation rate was high, GST has helped. However, the GST replacing entertainment tax in states like Punjab has made entertainment costlier.
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An entertainment tax is a tax that’s imposed on commercial entertainment events by the state government. For instance, you have to pay an entertainment tax (28% under GST) when booking movie tickets.
Entertainment tax allowance is a deduction government employees can claim while filing their yearly taxes. As per Section 16 (ii), government employees can claim the lowest of the following as a tax deduction under the category:
Entertainment tax is an indirect tax applicable to various entertainment services. This tax is levied and collected by state governments in India.
No, an entertainment tax is not a direct tax. It is a form of indirect tax where the tax liability is passed on to the end customer. So, the tax amount gets added to the final ticket prices payable by the customer