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GC: GST is a win-win for event organisers and audiences

27-November-2017
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GC: GST is a win-win for event organisers and audiences

These are interesting times for the events industry. After facing a slump in 2016 following demonetisation, the MICE (Meetings, Incentives, Conferences and Exhibitions/ Events) industry has yet again been rocked by GST. As an industry, it has witnessed tremendous growth over the past few years. According to a Deloitte report ‘Media and entertainment industry-India tax landscape,’ we are the fifth largest media and entertainment market in the world. Another report by PwC states that the industry is also expected to clock a 10.6 per cent compounded annual growth rate by 2021.

Some of the key factors for this growth are the rise in digital activations, IPs (intellectual properties,) personal events, product launches, sports leagues and a significant increase in below the line spends. As an industry that has been growing by leaps and bounds, with one of the country’s biggest economic reforms coming in place, we are gearing up for big changes and have already anticipated the effects it will have on our operations.

One of the biggest changes that the GST has brought about for the industry is that of a unified tax system. As per the final proposed GST Bill, the Government has put in place a four-tier structure wherein taxes will be levied at multiple rates starting from 5 per cent and going up to 28 per cent. Whereas under the earlier tax regime, event planners were subject to VAT, CST, service tax, CAD, SAD, entry tax, excise duty, entertainment taxes, etc. Under the new system, we will no longer have to approach the local departments for NOCs.

As a country that is both culturally as well as commercially rich, India has become one of the top locations for destination events and has attracted a growing number of foreigners. As a result of this, the hospitality sector has greatly benefited as there has been a surge in the demand for accommodation.

With GST coming in to the picture, the good news for the industry is that we will now have to spare less for hotel accommodation as it will be free from multiple layers of state and luxury taxes. Budget hotels, charging less than Rs. 1,000 per day will attract low or even nil GST, whereas those charging Rs. 5,000 and above will attract 28 per cent GST. Inns, clubs, guest houses and other commercial lodging having room tariffs above Rs. 1,000 but below Rs. 2,500 will be taxed at 12 per cent.

Renting of venues, with the current tax rate being 14 per cent, which constitutes a major expense for event planners, will also become cheaper as the GST Bill states that any lease of industrial or residential property for commercial use comes under the ambit of a service. Sources have stated that following this announcement, the Government is bracing itself to levy GST on all rental income.

In cases of ticketed events, the new tax system has been seen as a boon as organisers will compulsorily have to register themselves for GST. Entertainment tax, which was earlier charged separately, has now been included in GST. Tickets which were earlier taxed at close to 40 per cent (25 per cent entertainment tax and 15 per cent service tax,) will now become cheaper as the cap has been fixed at 28 per cent and in cases where the ticket cost is less than Rs. 250, they will be exempted from GST.

Although initial jitters will affect the event industry with budget cuts playing a major role, it is too soon to tell how will we be affected on the whole. Nonetheless, we are still hopeful of a positive change for the industry with the onset of GST.

Mazhar Nadiadwala is the Managing Director of Dome @NSCI.

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.

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