Want to buy popcorn with movie tickets? Here’s how you can pay lower GST

The next time you have a movie date, be sure to avoid any combo packages that include food and drinks in addition to the movie ticket.

Despite the Goods and Services Tax (GST) Council’s decision to reduce the tax on food and drink offered in theatres from 18 per cent to 5 per cent, the benefit can only be enjoyed if the two are purchased separately, said a report by Times of India (TOI).

“When bought together, it is treated as a composite supply and the principal supply there is watching the movie or giving access to the cinema hall, which is taxed at 18 per cent. Food happens to be incidental, and invoicing is done in a consolidated manner. However, if you only buy a movie ticket for entry and then buy food, the food will not be invoiced with the ticket, and you will be charged 5 per cent,” Central Board of Indirect Taxes and Customs chairman Vivek Johri told TOI.

The top official further said that the principle will apply even if the ticket is purchased online. “As long as they are billed separately, they will be charged at different rates.”

While the GST Council has decreased the rate on food and beverages to bring it in line with the charge in restaurants, it is now up to cinema halls to pass on the benefit to customers, which authorities will monitor, he added.

Revival of the theatre business

On June 11, the GST Council, chaired by the Union Finance Minister and composed of representatives from all states and UTs, decided to lower the service tax charged on food and beverages consumed in cinema halls from 18 per cent to 5 per cent.

Multiplex operators have applauded the GST Council’s decision, claiming that it will aid in the revival of the theatre business post-Covid and avoid litigation.

Food and beverages (F&B) are a significant source of revenue for the cinema exhibition sector, particularly for multiplexes, which generate up to 35 per cent of their revenue from this segment.

The GST council stated that it had been decided that the supply of food and beverages in cinema halls is taxable as restaurant service as long as;

1. They are supplied by way of or as part of a service and,

2. They are supplied independently of the cinema exhibition service. Where the sale of cinema tickets and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to the service of exhibition of cinema, the principal supply.

It means that if you book your tickets online and club food with it, then the tax rate of 5 per cent is not applicable.