GST Council Meeting Recommendations: Tax reduced on Food and Beverages served in Cinema Hall

In the 50th Meeting of the GST Council held on 11th July 2023, following recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST were made.

From one of proposal made before the govt., the decision was taken to reduced the Tax on Food and Beverages served in Cinema Hall.

The GST Council announced that food and beverages served at movie theatres will be included in the definition of ‘restaurant service’ and will be subject to a 5% GST rate, an issue that has been the cause of disagreements and litigation in recent months.

The multiplex industry petitioned the government for more clarification on the issue after tax authorities in several state jurisdictions asked cinema owners to pay GST at the rate of 18% for food and drinks served inside theatres.

The recommedations are as follows:

The government has decided to clarify that the supply of food and beverages in movie halls is subject to tax as a restaurant service if (a) they are offered as part of or in addition to a service and (b) they are supplied independently of the cinema exhibition service.

Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.