Monday, December 24, 2018

GST on Cinema Tickets

The Union Government of India has recently announced a reduction of GST on Movie Tickets from 28% to 18%. The Film Industry took collective credit for hard-bargaining this issue with the Prime Minister and many celebrities thanked him on social media. However, the average movie-goer isn’t too kicked.


2018 has been very average for the Indian Film Industry with many high profile, high budget Hindi films tanking like no other, notably Shah Rukh Khan’s latest outing “Zero” and Amitabh Bachhan / Aamir Khan’s magnum opus “Thugs of Hindostan”. Needless to say, the only saving grace was Superstar Rajinikanth’s 2.0 directed by ace Director Shankar, his third outing with the mega actor after Sivaji - The Boss (2007) and Enthiran (The Robot) which released in 2010. Produced by Lyca at an estimated budget of over Rs. 550 Crores (a little less than USD 80 million) - perhaps the only Indian film to have been invested so much upon. And to everyone’s surprise, the film has raked over Rs. 700 Crores at Box offices worldwide in its first three weeks of release and is still seeing full occupancies during the Christmas / New Year weekend as well. Karan Johar took up the release of the film in the Hindi Belt and has done a fantastic job indeed. 


I was at Delhi two weeks back and finished my meetings ahead of schedule and was sitting over a Cappuccino in one of South Delhi’s tony Malls. Was quite excited to watch 2.0 in Hindi (after watching 4 times in Tamil already at various theatres in Chennai). The ticket cost for 2.0 in 3D was Rs. 450 including GST. Add to that, my proposed indulgence of Popcorn, Nachos and Coffee and I would have ended up spending at least Rs. 1,000 over 4 hours. At a spur of the moment, I decided against it and went ahead with some other plans. Of the Rs. 450, I guess 28% would have been taxes. So, I would have paid about Rs. 120 as GST which would now be reduced by Rs. 40 approximately (depending on Ticket costs). 

Is reduction of GST on cinema tickets a good move? Yes. 

Will it draw more audiences in to the Cinemas / Multiplexes? Perhaps Not.

Here’s why I reckon so;

Most theatres focus on the F&B offering than the core - Movies. Multiplex chains like PVR and SPI Sathyam (now owned by PVR) focus on the “experience” of watching a movie while standalone Cinemas too have focussed on improving facilities. Sadly, reduction of GST is not enough to draw audiences. We need better content from film makers and needless to say, a sharp reduction in F&B prices. By reducing the prices and focussing on volumes, the Theatre Owners would see a significant jump in occupancy which hovers around 40% on weekdays and approx. 70% on weekends. 



GST is now reduced from 28% to 18% on Tvs - Smart Tvs which come with built-in OTT Apps like SunNxt, Hotstar, Zee5 and of course YouTube. Theatre Owners, hello there?!?

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