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Demonetization Effecting the Media and Entertainment Industry

Essay by   •  January 10, 2018  •  Article Review  •  943 Words (4 Pages)  •  682 Views

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The central government had come up with another economic reform as demonetization in the form of GST i.e. Goods and Services tax. This was done with the intention of dissolving different kinds of taxes that existed previously and bring into being a uniform taxation system. GST came into effect “8th November” and in the wake of it the repercussions in different sectors have been varied. The effect of GST in media and entertainment industry has been very significant. On one hand it has unprecedentedly brought about an opportunity to the business houses to claim input credit against ad expenses thereby providing a boost to the media and the advertisement industry. Whereas on the other hand implementation of GST has made the different concerns curtail their advertisement budget to cope up with the increase in price of raw materials and consequent rise in manufacturing cost.[pic 1]

                   Advertising industry has seen a reduced ad spend from different sectors like petroleum, e-commerce, banking and finance services, alcohol,

Government organization, power and utility, education institution and tour operators after implementation of GST. Luxury brands, which used to spend a huge amount in advertising, will be seen to decrease their ad spends as an impact of GST and how the customer has become conscious before spending. GST has led to increase in advertising spends especially for digital advertising. Digital media is expected to benefit the most because digital advertising is increasing at a rapid pace. GST has majorly affected the following segments: -

Firstly, on entertainment aspects like movies, movie hall multiplexes are supposed to pay 28% GST, cable and DTH 18%. Movie tickets below 100 has to pay 18% of the GST and those above 100 has to pay 28% of the GST which is the major part of the box office. Meanwhile GST for circus, theatre, and drama is 18% and 28% for amusement park, race and other sporting events.

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                       According to CNBC article, local taxes by local bodies has been introduced which has led to an increase in the entertainment taxes. Few legal implications for newspapers and media agencies like registering their organization’s name in each and every city they work in has become a huge hustle. Previously it was just one central registration of the particular agency.

                    TV and film producers are at advantage in this because they can pay off the GST from the revenues that they earn but it has become difficult for people who watch movie in the theatre who pay 28% of the GST now.

                      According to HINDU article, there is an increase in GST from 3% to 5% in print industry. Printing news or advertisements on the newspapers now pays 5% of the GST, which had led to a burden for the smaller newspaper agencies whose readership, and circulation is not as high as the established news agencies.



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