CA Manish Garg

CA Manish GargWhile thinking for the entertainment now the question arises, which field is out from the service tax net? For the entertainment or enjoyment what a person thinks to do, whether it is eating outside with family, going to amusement parks, traveling outside for holiday, going to enjoy any artistic performance or any other things, all the sources are now under the service tax net and it seems that government has put the taxes on the sources of smile of a person.

With the introduction of the budget 2015, some the drastic changes came in the Indirect Taxation which has ultimately put the great burden on the consumer pocket. Eating out with the family was made costly earlier by removing of exemption related to restaurants. In the recent budget also the definition of services has also been widened to include more services in the tax net.

Except from taxable net point of view the budget announced an increase in service tax from 12.36 per cent to 14 per cent for 2015-16. The government, however, tried to soften the blow by saying that this would facilitate the transition to the Goods and Services Tax (GST), targeted to come into force in 2016-17 but the ultimate cost of the same is being born by the consumer and there is no credit for the same is available to him.

With the increase of tax related to eating out with the family now the outing with the family for some fun has now been made under the tax net, it seems that the central government is trying to put the tax on the smile of the consumers, which he gains while enjoying in the amusement parks etc.

In the present budget access to amusement facility will be subject to service tax as the entertainment for the kids becomes more costly. Further the exemption of admission in amusement parks is become narrowed and limited. The implication of this change in budget is as follows:

  • Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.
  • Service tax to be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concerts, award functions and sporting events other than the recognized sporting event, if the amount charged is more than Rs. 500 for right to admission to such an event. However, the existing exemption, by way of the Negative List entry, to service by way of admission to entertainment event, namely, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical performance including drama and ballet shall be continued, through the route of exemption. For this purpose a new entry is being inserted in notification No. 25/12-ST. The term recognized sporting event has been defined in the proposed amendment in the said notification.

Further the Entertainment related to classical art form of music, dance or theatre has also become more costly as the blanket exemption to all the services provided by a performing artist in folk, classical art form of music, dance or theatre has been removed. The Finance Minister has curtailed the exemption to services of artist only when the amount per performance is not more than INR 1,00,000.

With the increase in the rate of service tax, the tax net has also been increased which is ultimately being born by the consumer. As today the entertainment is not affordable for everyone, so what will the expectation of a consumer from the GST, whether in the real sense it will reduce the cost to the consumer and increase his buying power or still the consumer will be under the tax burden.

“Hope the GST will bring the tax free smile on the face of the consumer”

(Author may be contacted at Mail – Contact – 8586055516)

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