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'Toilet-Ek Prem Katha' first film to be made tax free in GST regime

State govts could earlier waive off entertainment tax on movies. But with GST coming into effect, the state entertainment tax was subsumed into GST and ceased to exist.

, ET Bureau|
Last Updated: Aug 16, 2017, 06.21 AM IST
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The story of Akshay’s movie is based in UP and centred on the issue of open defecation which plagues the state.
The story of Akshay’s movie is based in UP and centred on the issue of open defecation which plagues the state.
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NEW DELHI: Akshay Kumar starrer ‘Toilet-Ek Prem Katha’, which has raked in over Rs 50 crore already got a shot in the arm from the Yogi Adityanath government, which moved within two days to ensure that cinegoers get to watch the movie at cheaper tickets in the state.

In the process, the movie has become the first big Bollywood release to get such a benefit in the new Goods and Service Tax (GST) regime as UP waived state GST share on the movie’s tickets. State governments could earlier waive off ‘entertainment tax’ on movies.

But with GST coming into effect from July 1, the state entertainment tax was subsumed into GST and ceased to exist. Air-conditioned cinema halls fall under 28% GST - with Central GST (CGST) share being 14% of the net ticket price and the State GST (SGST) share being an equal 14%.

The story of Akshay’s movie is based in UP and centred on the issue of open defecation which plagues the state. The actor visited Lucknow on August 4 when the CM announced the movie would be tax-free in the state. The GST Empowered Committee had earlier given an approval to states to find a way out on this.

As per official correspondence reviewed by ET, UP government on August 9 brought a policy by which cinema owners could reduce ticket prices equal to the SGST amount but still deposit the SGST amount with the state government treasury. The policy said the state would “reimburse” a corresponding amount to the cinema owners in due course.

On the next day, August 10, UP issued an order extending the exemption to the Akshay Kumar-starrer movie under the said August 9 policy. The movie released on August 11.

The UP policy listed eight kinds of films which could be considered for the exemption and desired film-makers to submit an application to UP government for claiming the said exemption. The state government reserves the right to accept or reject the application. ‘Toilet-Ek Prem Katha’ probably fell in category number 7 as per the UP Policy – “films which are made in public interest, show a direction to society and give a positive message, thereby it is in public interest that maximum people get to see the movie.” Category number 8 involved films which “have been shot more than 50% in UP.”

CM Adityanath has fixed an ambitious target of December 2018 for UP to go open-defecation free. This is almost a year ahead of the national deadline of October 2019.

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