GST on Media and Entertainment

The GST regime has reshaped taxation in the media and entertainment sector, where margins are tight and trends shift rapidly. It affects every part of the value chain—from content creation to distribution. Understanding these changes helps businesses ensure compliance, manage costs, and make informed decisions across broadcasting, licensing, digital streaming, and production. In this article, you will learn in detail about GST on media and entertainment.

Taxation on Media and Entertainment: Pre-GST Era

Before the implementation of GST, the media and entertainment industry was subject to a fragmented taxation structure. Entertainment Tax was levied separately by each state, often ranging from 15% to over 100%. Several states offered full exemptions for regional language films to promote local culture. This inconsistency led to higher tax burdens, complex compliance, and limited input credit availability across the value chain.

Service Tax on Media Services (Pre-GST)

Before GST, service tax applied to broadcasting, advertising, and content services. The standard service tax rate was 15%, but the government allowed an abatement of 60% on certain services like advertising on TV, radio, or in cinemas. This meant only 40% of the invoice value was taxable, bringing the effective tax rate down to 6% (15% × 40%).

Total Tax Burden under the Pre-GST Regime

Under the pre-GST structure, businesses in media and entertainment faced multiple indirect taxes. VAT is applied to goods like CDs, DVDs, and equipment, while service tax is applied to broadcasting, advertising, and licensing services. After accounting for abatement, the effective service tax came to 6%. The combined tax burden often reached around 20.5%, increasing operational costs and compliance load.

Rates of GST On Media and Entertainment

The rates of GST on media and entertainment are listed below:

GST Taxation Regime on Media and Entertainment

GST has streamlined the tax structure across the media and entertainment sector by combining various indirect taxes into a single tax system. It applies to both goods and services, based on clearly defined supply rules.

 Time of Supply

1. Time of Supply – Regular Transactions

Time of supply refers to the point at which GST liability arises. For services, it is the earliest of the following:

• The date the invoice is issued
• The date payment is received (including advance)
• The date the service is provided, if the invoice is not issued within the time limit

2. Time of Supply – Reverse Charge Mechanism (RCM)

Under Reverse Charge, the liability to pay GST shifts from the supplier to the recipient. The time of supply is determined as follows:

• For services: the earlier of the date of payment or 60 days from the invoice date
• For goods: the earlier of the date of payment or 30 days from the invoice date

Place of Supply

1. Place of Supply – Goods Sold at Movie Halls

For the sale of goods like food and beverages inside a cinema hall, the place of supply is the movie hall itself. Since the transaction happens at a fixed physical location, it is treated as an intra-state supply and attracts CGST and SGST.

2. Place of Supply – Services

For services, the general rule is:

• If the recipient is registered, the place of supply is their registered location.
• If the recipient is unregistered and their address is not available, the place of supply defaults to the location of the service provider.

3. Place of Supply – Services Performed at Movie Halls

For services like screening films, hosting live performances, or renting space within a cinema hall, the place of supply is the location where the service is performed. In this case, it is the movie hall itself, regardless of where the customer is located.

4. Place of Supply – Events and Entertainment Services

In the case of events, exhibitions, and amusement services, GST law determines the place of supply based on the nature of the event and the type of recipient (registered or unregistered). This ensures the correct application of either CGST+SGST or IGST.

5. Value of Supply – Media and Entertainment

The value of supply refers to the total amount charged by the seller or service provider from the buyer or recipient. It includes the price paid or payable, along with any incidental charges such as booking fees, royalties, or convenience charges—if they are directly linked to the sale or service. This value becomes the basis for calculating the applicable GST.

GST on Online Supplies of Digital Content (OIDAR Services)

Online supply of digital content—such as music, films, television shows, or digital books—is classified under OIDAR (Online Information Database Access and Retrieval) services. These services are delivered over the Internet without any physical interaction.

• Case 1: Both Supplier and Recipient Are in India

When both the service provider and recipient are located in India, GST is charged at 18%. The supplier must be registered under GST and is responsible for collecting and depositing the tax with the government.

• Case 2: The Supplier Is Outside India and the Recipient Is in India

In cross-border transactions, the place of supply in India, and the tax treatment depend on the recipient's registration status:

• • If the recipient is a GST-registered business: The business must pay GST under the Reverse Charge Mechanism (RCM) and report the transaction in its returns.
  • If the recipient is an individual or unregistered user: The foreign supplier must register under Indian GST law, charge 18% GST, and deposit it with the Indian government. This ensures tax compliance even for consumer-level international supplies.

Impact of GST on Media and Entertainment Industry

The impact of GST on media and entertainment industry is explained below:

• Impact of GST on Exhibition of Movies

Before GST, movie tickets attracted state-level Entertainment Tax ranging from 15% to 110%, with no VAT or Service Tax. The rates varied widely, averaging around 30%, and there was no input tax credit available.

 Under GST, ticket prices up to ?100 are taxed at 12%, and tickets above ?100 are taxed at 18%. Broadcasting services, including DTH and cable, now attract 18% GST, replacing earlier combined levies. GST allows seamless input tax credit, reducing cost inefficiencies. While most entertainment taxes are now subsumed, certain local bodies still hold the authority to levy separate amusement taxes.

• Impact of GST on Food and Beverages at Movie Halls

Earlier, food and beverages at movie halls attracted both VAT (around 20.5%) and Service Tax (15%), increasing the total tax burden. Under GST, if sold separately as a restaurant service, food is taxed at 5% without input tax credit.

However, when food is supplied along with the movie ticket as part of a combo, the transaction is treated as a composite supply. In such cases, GST applies at the same rate as cinema services—12%, 18%, or 28%—based on the ticket value. This change offers tax clarity while enabling cinema operators to claim input credit on bundled supplies.

• Impact of GST on Film Distribution

Earlier, copyright transfers for film exhibitions attracted service tax, and producers faced added tax on services from actors and technicians. Television rights often faced dual taxation due to unclear classification as goods or services. Intellectual properties like trademarks and copyrights are subject to VAT.

Under GST, all such transfers are treated as services and taxed at a uniform 18%. This change eliminates dual levies, allows input tax credits, and reduces the overall tax burden on producers. It also simplifies compliance and brings consistency in the taxation of film distribution and intellectual property rights.

• Impact of GST on Services Rendered by Artists and Technicians

Earlier, artists and technicians paid 15% service tax on a forward charge basis. Under GST, performances in folk or classical art forms are exempt if the fee does not exceed ?1.5 lakh. All other artist services, including brand endorsements, are taxed at 18%.

Technicians like authors, composers, and photographers now attract 18% GST under the reverse charge mechanism, shifting the tax burden to producers. This change has increased compliance for production houses while exempting individual service providers in certain categories, depending on the nature and value of the service.

• Impact of Sponsorship and Brand Promotion under GST

Before GST, sponsorship and brand promotion services attracted 15% service tax. Under the GST regime, these services are classified as taxable commercial activities and are subject to a flat 18% GST. This rate applies to sponsorship deals, event branding, celebrity endorsements, and all promotional contracts across media platforms.

The shift to GST has resulted in a higher tax rate for sponsorship and brand promotion activities. This has increased the cost for advertisers and sponsors, affecting budgeting in promotional campaigns and event marketing.

• Impact of GST on Sponsorship and Brand Promotion

Before GST, sponsorship and brand promotion services attracted 15% service tax. Under the GST regime, these services are classified as taxable commercial activities and are subject to a flat 18% GST. This rate applies to sponsorship deals, event branding, celebrity endorsements, and all promotional contracts across media platforms.

The shift to GST has resulted in a higher tax rate for sponsorship and brand promotion activities. This has increased the cost for advertisers and sponsors, affecting budgeting in promotional campaigns and event marketing.

• Impact of GST on Advertisement

Earlier, advertisements in print media were exempt from service tax, while other formats attracted 15% service tax. Under GST, print media ads are taxed at 5%, and digital, TV, radio, and outdoor ads attract 18%. GST allows businesses to claim input tax credits on services used for creating and placing advertisements, which was not allowed under the earlier regime. The removal of the exemption for print media increased costs slightly, while the overall GST rate for other ad formats rose to 18%. However, input tax credit helps reduce the effective tax burden.

• Impact of GST on Amusement Parks

Before GST, amusement parks were subject to state-specific Entertainment Tax, ranging from 15% to 110%, with an average of about 30%. These services did not attract VAT or Service Tax. Under GST, amusement park entry and related services are uniformly taxed at 18%, replacing varied state-level taxation with a single rate across India.

GST has reduced the tax burden in states where the entertainment tax was high. However, it has increased the effective tax rate in states that earlier had low or no entertainment tax, affecting ticket pricing and customer footfall.

Conclusion

To sum up, GST on media and entertainment simplifies a previously fragmented tax structure. It streamlines compliance, enables input credit across services, and standardises rates for cinema, broadcasting, advertising, and digital platforms. The unified framework reduces cascading taxes and improves financial visibility across the industry.

For businesses navigating these regulatory changes, compliance is not optional—it is strategic. Online Legal India offers expert assistance in GST registration, classification, returns, and advisory services, ensuring your media operations remain compliant, cost-efficient, and future-ready in a competitive market.