Multiplex companies—PVR Ltd and Inox Leisure Ltd—are expected to benefit from the implementation of the goods and services tax (GST). That’s mainly on account of the input tax credit on fixed costs that these firms bear such as rent, common area maintenance and so on. Ratings agency Icra Ltd estimates that input tax credit will be available on 33% of the total operating expenses. The GST rate has been fixed at 28% for tickets costing over Rs100 and 18% for those under Rs100.
Tickets below Rs100 account for a small portion of overall ticket sales of PVR and Inox. This is disappointing considering that the entertainment tax is in a similar range (of 28%) for these firms. As analysts from Dolat Capital Market Pvt. Ltd point out, entertainment tax for PVR and Inox based on their net box-office collection is 29% and 27%, respectively, as on fiscal year 2017 (FY17) and thus a 28% GST rate would not have any impact for the multiplex chains. Note that the industry was expecting 18% rate across the board.
Tickets below Rs100 account for a small portion of overall ticket sales of PVR and Inox. This is disappointing considering that the entertainment tax is in a similar range (of 28%) for these firms. As analysts from Dolat Capital Market Pvt. Ltd point out, entertainment tax for PVR and Inox based on their net box-office collection is 29% and 27%, respectively, as on fiscal year 2017 (FY17) and thus a 28% GST rate would not have any impact for the multiplex chains. Note that the industry was expecting 18% rate across the board.
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