PVR and peers get tax relief as GST on pre-booked snacks drops to 5%

The Goods and Services Tax (GST) council has made it clear that the tax rate for food and beverages (F&B) sold at cinema halls will be fixed at 5 percent. This decision was prompted by the Multiplex Association of India's request to lower the tax, which arose due to confusion caused by reports of cinema halls receiving notices regarding the GST they were imposing.

In an interview with CNBC-TV18, Nitin Sood, CFO of PVR INOX shed light on the clarification made by the GST council regarding the tax rate on F&B sold at cinema halls. The announcement comes as a relief to both moviegoers and multiplex operators who were seeking clarity amidst confusion and reports of notices being issued for incorrect GST charges.

He said, “The industry (cinema) had made a representation to the council to clarify GST, and we are happy that the government and the council have issued a clarification saying that the sale of food and beverages in cinema halls will continue to be taxed at 5 percent.”

While talking about pre-booked snacks, Sood said that it will continue to be taxed at 5 percent under the GST regime. This clarification brings much-needed certainty to the industry, as pre-booking snacks has become increasingly popular among movie enthusiasts. By maintaining the 5 percent tax rate, the government ensures that consumers can enjoy their favourite snacks without a significant increase in prices.

He also highlighted that the average F&B spend at cinema halls accounts for approximately 50-52 percent of the ticket price. “Cinema average F&B spend today is approximately 50-52 percent of average spending on a ticket by a consumer. And there is no reason this number should not be higher. In Western countries, we have seen this ratio as high as 70-75 percent as well. And that is our aim that over the next few years, we increase the overall F&B consumption at cinemas,” said Sood.

The clarification by the GST council has been met with a positive response from the industry. Multiplex operators, including PVR INOX, have expressed their appreciation for the clarity provided by the government.

Additionally, the PVR cinemas while responding to a user who complained of expensive food items at one of the PVR cinemas in Noida, tweeted that it has slashed the prices of some food items and beverages. The individual received an invoice of Rs 820 for 55 gm of popcorn and 600ml of Pepsi— costing Rs 460 and Rs 360 respectively.

Some of the food items including burger, samosas, a combo of sandwich and Pepsi would be available for Rs 99 from 9 am to 6 pm on Monday to Thursday. While, from Friday to Sunday, cinema-goers would be able to make unlimited refills on buying either of 240 gm bucket of popcorn and 810 ml of Pepsi, informed the company.

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