Entertainment Tax in India

Meaning of Entertainment Tax – All financial transactions incurred on entertainment like big private festivals, movie tickets, large commercial shows etc attract entertainment tax in India. In simple terms, it may be stated that entertainment industry in India is ought to pay taxes in the form of entertainment tax to the government.

Going by the Constitution of India, the list 2 of the Seventh Schedule entails entertainment and, thus, the revenues generated through this are primarily reserved for state governments.

Apart from some activities mentioned above, entertainment taxes are also extended to the following –

Prior to independence; huge taxes were levied by the British Government on all the amusement or entertainment that was then staged. This was done in order to curb public rebellion that could have been caused due to massive Indian gatherings in those sensitive times. However, even after independence, the laws are still intact and effective in few states and are yet to witness changes and alterations.

Paid Television Services in India has further lead to the growth of revenue through entertainment. Services like, broadcasting, cable, DTH, Pay services etc are subjected to tax by the state as well as the union government.

Entertainment Tax Rates Applicable in India – Following table gives a clear view about the entertainment tax rates that are applicable throughout India in different states.

 

Applicability of Entertainment Tax in India – Entertainment in India forms the core of numerous services and financial transactions. The entertainment tax is applicable throughout the country in some form or the other and cannot be separated from the whole transaction.

Authorities responsible for Collection of Entertainment Tax in India – Sate Governments hold the flag when it comes to collection of entertainment tax in India. However, certain types of transaction under this head also fall under the flag of the Union Government and even they are entitled to collect entertainment tax.

Article 246 framed under the Constitution of India lays down the financial principles on the basis of which the financial transaction can be separated. On the basis of these principles one can distinguish between the taxes that are to be collected by the state government and those which fall under the kitty of Union Government.

Article 246 of the Indian Constitution also mentions clearly that in the event of conflict that may arise between State Government and Union Government regarding entertainment taxes, Union Government would have an edge in imposing the taxes.