Home Local and State Taxation Entertainment Tax at a Glance

Entertainment Tax at a Glance

Entertainment Tax at a Glance

Entertainment tax is a tax that is levied by the government on entertainment-related activities such as movies, gambling, amusement parks, and sporting events. It is a form of indirect tax that is charged by the government on the entertainment services or goods that are being sold or provided by an individual or a company. Entertainment tax is a state subject and its rates vary from state to state. In this article, we will discuss the different aspects of entertainment tax and how it affects the entertainment industry.

Types of Entertainment Tax

Entertainment tax is levied on various forms of entertainment activities such as:

1. Movies: Entertainment tax is charged on the sale of movie tickets and revenue generated by the movie.

2. Amusement parks: It is charged on the entry fee and all the rides in the amusement park.

3. Sporting events: Entertainment tax is levied on the ticket sales for any sports event.

4. Gambling: It is charged on the revenue generated by the gambling activities, such as casinos.

5. Television shows: Entertainment tax is charged on the revenue generated by the production and broadcast of TV shows.

Entertainment Tax Rates in India

As mentioned earlier, entertainment tax is a state subject and its rates vary from state to state. The entertainment tax rate in India ranges from 20-45% depending on the state. Different states have different slab rates for the entertainment tax. For example, in Maharashtra, the entertainment tax rate on movies is 45%, whereas in Delhi, it is 30%. In Tamil Nadu, there is no entertainment tax on movies that are censored by the Central Board of Film Certification.

The Entertainment Tax Act in India

The entertainment tax act is a legal framework that governs the collection and payment of entertainment tax. The entertainment tax act in India was first implemented in 1918 and has since undergone several amendments. The act provides for the levy and collection of entertainment tax by the state government. The act also sets out the rules and regulations for the collection of the tax by the local government authorities.

Entertainment Tax on Movies in India

One of the primary sources of entertainment tax revenue for the government is movies. In India, entertainment tax is levied on the sale of movie tickets and the revenue generated by the movie. In recent years, there has been a significant increase in the entertainment tax rates on movies, which has led to an increase in ticket prices. The entertainment tax on movies is one of the reasons why movie tickets are becoming more expensive in India.

The entertainment tax on movies in India also varies from state to state. In Maharashtra, the entertainment tax rate on movies is 45%, whereas in Delhi, it is 30%. In Tamil Nadu, there is no entertainment tax on movies that are censored by the Central Board of Film Certification. The government has also exempted movies that promote national integration and patriotism from entertainment tax.

Impact of Entertainment Tax on the Entertainment Industry

Entertainment tax is a significant source of revenue for the government, but it has a significant impact on the entertainment industry. With the increase in entertainment tax rates, the cost of producing movies and providing other forms of entertainment has increased. This, in turn, has led to an increase in ticket prices, which has made it difficult for the middle class to afford entertainment. The entertainment tax has also led to a decrease in the number of screens in India, as many theatres have closed down due to the high entertainment tax rates.

The entertainment tax has also had a significant impact on the movie industry. Many filmmakers in India have to face financial difficulties due to the high entertainment tax rates. The entertainment tax has also led to the decrease in the number of films that are released annually, as it is becoming increasingly difficult for independent filmmakers to make a profit.

The Future of Entertainment Tax in India

In recent years, there has been a significant increase in the entertainment tax rates in India, which has made it difficult for the entertainment industry to thrive. The government is aware of the impact of entertainment tax on the entertainment industry and has been taking steps to address the issue. The government has been trying to reduce the entertainment tax rates to promote the growth of the entertainment industry.

The government of India has also introduced the Goods and Services Tax (GST), which is a single tax system that replaces all the indirect taxes levied by the central and state governments. The introduction of GST has led to the reduction in entertainment tax rates, which is a positive development for the entertainment industry. The GST rates on movie tickets have been reduced to 12% from the earlier 28-30%. This has resulted in a decrease in the cost of movie tickets, making it more affordable for the middle class.

Conclusion

Entertainment tax is an important source of revenue for the government, but its impact on the entertainment industry has been significant. With the increase in entertainment tax rates, the cost of producing movies and providing other forms of entertainment has increased, which has led to an increase in ticket prices. The entertainment tax has also led to a decrease in the number of screens in India, making it difficult for the entertainment industry to thrive.

The government of India has recognized the impact of entertainment tax on the entertainment industry and has taken steps to address the issue. The introduction of GST has led to a reduction in entertainment tax rates, which is a positive development for the entertainment industry. The reduction in entertainment tax rates will help the industry to grow and provide affordable entertainment to the masses.


Similar to a luxury tax, entertainment taxes are imposed on items that are considered to be extravagant, or luxurious in nature. Entertainment is not considered a necessity for citizens, and can therefore, be subject to taxation.The entertainment tax often applies to tickets to events, including movie tickets, theatre tickets and concert tickets.

The tax may also be applied to music Cd’s and DVD’s when rented, or purchased at the store. Each state will have differing rules and regulations that dictate when the entertainment tax is applicable. Most states do not tax events which are considered educational in nature, such as museum trips.

Often times, venues dispute the entertainment tax imposed on their venue. The Wisconsin Supreme Court ruled that the states tax policy allowed for a tax on the Symphony orchestra. Yet other states have a tax policy that would consider that type of event as educational. Each state has differing regulations in their tax policy, which dictates the tax rate and the events that include the entertainment tax.

Generally, states determine imposition of the entertainment tax, based on several factors. In the case of a museum, admission is often tax exempt. The primary purpose of going to a museum, is thought to be educational. Events with an educational purpose, or a fund raising purpose, are often exempt from the entertainment tax.

In some states, tax policy would allow the entertainment tax to be imposed if an event at the museum were for entertainment purposes, such as concerts or other shows. Each state has a tax policy that defines taxation and the items and events to which the taxes apply.

States that impose entertainment taxes, as per the states tax policy, often impose the taxes on events that have a primary purpose of entertainment. The primary purpose question is sometimes challenged in court. In Wisconsin, it was held that music, of any kind, is entertainment, unless the event has a primary purpose of fund raising.

Primary purpose, is generally determined if more than half of the show, is meant to entertain the audience. The organization in charge of the event, may also play a factor in the primary purpose test. If an educational organization has an event which is in question, the type of organization sponsoring the event may be the determining factor in whether the tax policy allows an entertainment tax exemption.