BMC proposes higher entertainment tax on cinema shows in Mumbai

Mumbai: Movie tickets in Mumbai could become costlier by Rs 5-10 if the Brihanmumbai Municipal Corporation’s (BMC) proposed hike in entertainment tax on cinema shows is implemented. The civic body has proposed increasing the levy on multiplexes to Rs 400 per show from the existing Rs 60, a nearly sevenfold increase that exhibitors fear could affect box office revenues and lead to higher ticket prices.The proposed tax is levied per show rather than per ticket. Exhibitors and producers have indicated that the additional cost could eventually be passed on to moviegoers, potentially pushing up average ticket prices in the city.“Without getting into granular details, the hike of Rs 340 entertainment tax per show will be passed on to consumers. This may lead to an increase of Rs 5-10 per ticket,” an exhibitor told The Economic Times, requesting anonymity.Mumbai has a high concentration of multiplexes and single-screen theatres, with average ticket prices majorly higher than the national average. The city also accounts for an estimated 20-25 per cent of India’s gross box office collections, making any change in cinema taxation key for the exhibition and distribution sectors.However, the proposed hike has not yet come into effect. The BMC is awaiting approval from the state government’s Urban Development Department. Until the revised rates are sanctioned and notified through a Gazette notification, cinema halls and other entertainment venues will continue to pay the existing tax.Mumbai Theatre Tax Hike On Hold: BMC Awaits State Nod; Multiplex Rate Proposed At ₹400 Per Show Proposed Revised Theatre Tax Rates Under the BMC’s proposal, multiplexes would pay Rs 400 per show, compared with the existing Rs 60 for air-conditioned cinemas. Single-screen AC cinemas would be charged Rs 200 per show, while non-AC cinemas would pay Rs 90. The proposed levy for dramas, jalsas and other entertainment programmes is Rs 100 per show.At present, AC cinemas pay Rs 60 per show and non-AC cinemas Rs 45. Dramas and other entertainment programmes attract a tax of Rs 25 per show, while circus performances and funfairs are charged Rs 50 per day. BMC Law Committee member Tajinder Tiwana said the proposal was discussed at length on September 22 and would be taken up for further discussion.The civic body has proposed retaining the existing theatre tax rates for 2027-28 until the state government approves the revised structure. The new rates will come into force only from the date specified in the official notification.'Kaun Dekhega Filmein?': Fatima Sana Shaikh Questions Proposed 570% Entertainment Tax Hike In Mumbai Marathi, Gujarati Productions To Remain Exempt The proposed structure retains the existing exemption for Marathi and Gujarati films, plays, one-act plays and tamashas, irrespective of the type of theatre in which they are staged. The BMC has also proposed continuing a 6 per cent concession for taxpayers who pay their monthly theatre tax in advance by the fifth of the month. The concession, introduced in 1959, is proposed to remain applicable during 2027-28.The revised annual theatre tax structure will require approval from the BMC Law Committee, Standing Committee and the civic house, in addition to the state Urban Development Department’s sanction. Until the necessary approvals are secured, the existing rates will remain applicable. To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/

The BMC has proposed a sharp hike in Mumbai's entertainment tax, including a rise from Rs 60 to Rs 400 per show for AC cinemas and multiplexes. The proposal awaits state approval and could increase ticket prices by Rs 5-10.

The recent Brihanmumbai Municipal Corporation (BMC) proposal to raise the tax on films per show is likely to marginally increase ticket prices in the Maximum City, as the new entertainment levy impacts revenues shared between exhibitors and distributors.Mumbai, which has high penetration of multiplexes and single-screens and has significantly higher Average Ticket Price (ATP) relative to the national mean, contributes 20-25% to India’s gross box office collections.Recently, the BMC proposed to increase the entertainment tax on per film show—not per ticket—of exhibitors to Rs400 from existing Rs60, amounting to a jump of nearly seven times.This new entertainment tax on shows is likely to reduce box office revenue collection available and consequently, exhibitors estimate the average per ticket price may increase in the range of Rs 5-10, exhibitors and producers told ET.BMC New Proposed Entertainment ImpactParticularsCurrent taxProposed taxGross collection (Rs)100000100000Less: GST (18%) included in gross (Rs)15254.215254.23729Less: service charge (Rs)10001000Less: show tax (all shows) (Rs)*4202800Net collection available for sharing83325.780945.7Exhibitor share (50%)41662.840472.8Distributor share (50%)41662.840472.8Distributor difference vs current (Rs)01190Source: Karmic Films, number of shows considered is sevenConcerns loom over a possibility of a ripple effect of the tax to other territories in India amid what exhibitors claim to be a rather tepid business environment.“The new BMC tax proposal defeats the purpose of a one nation-one tax policy framework. It has come at a time when the business in India’s exhibition industry has not comprehensively surpassed pre-Covid levels,” said Devang Sampat, managing director, Cinepolis India.A key aspect in the proposed entertainment tax is that the levy is on shows and not on tickets, pointed out producers. But it will impact the box office revenues available for sharing between exhibitors and distributors after deducting the taxes, they said. “This is a fixed tax per show regardless of how many tickets are sold by exhibitors,” said Suniel Wadhwa, co-founder, Karmic Films. “But a higher tax on per show reduces the collection available for sharing between exhibitors and distributors.”Film trade analysts said that occupancy in theatres will be an important variable which will impact the tax costs for exhibitors. Lower the occupancy higher will be the tax costs incurred, thereby reducing box office revenue available for sharing. “The new proposed tax is tightly linked to occupancy. This is because the tax is on shows and not on tickets,” said Girish Wankhede, a movie trade analyst.On average, exhibitors estimate the average ticket price in Mumbai may go up in the range of Rs5-10 once the proposed tax is implemented. “Without getting into granular details, the hike of Rs340 entertainment tax per show will be passed on to consumers. This may lead to an increase of Rs 5-10 per ticket," said an exhibitor, requesting anonymity.