India’s film and entertainment industry will be watching Sunday’s Union Budget closely, as it comes just months after the rollout of GST 2.0 and amid a patchy box office recovery.
Under the pre‑reform structure, cinema tickets were taxed at 12 per cent for prices up to Rs 100 and 18 per cent above Rs 100, a dual slab that exhibitors said pushed most multiplex tickets into the higher bracket and hurt affordability.
GST 2.0, implemented after the 56th GST Council meeting, rationalised slabs by effectively moving to a two‑rate structure of 5 per cent and 18 per cent, with the 12 per cent and most of the 28 per cent categories merged downward.
Sector reports and industry statements indicate that while many 12 per cent items shifted to 5 per cent, cinema exhibition largely remains in the standard services bracket alongside other discretionary spends.
Multiplex chains, through the Multiplex Association of India (MAI), have publicly argued for a deeper cut: 5 per cent GST on tickets up to Rs 300 and 18 per cent above that, saying the current regime keeps effective tax on most tickets near the top slab.
But then, viewers are divided. Chennai-based 26-year-old Ramalingam C said, "If multiplexes in other states want tax relief, they can always reduce the ticket rates" Tamil Nadu has a cap on regular movie tickets up to Rs 120, excluding taxes. The IMAX ticket cap was at Rs 480 per ticket.
Karnataka also followed suit. But this is ticket cap is not followed in places like the National Capital Region. Delhi-based Ruvansh V said, "If tax is cut, we will get cheaper tickets."
Why the cinema industry wants relief
According to the latest EY–FICCI and MPA–Deloitte estimates, India’s film segment generated around Rs 16,000–18,000 crore in gross box office revenues in recent pre‑pandemic‑plus years, with Hindi films alone crossing Rs 5,280 crore in 2024.
Yet total screens remain stuck around 9,000, heavily concentrated in the South, and per‑capita cinema visits lag markets like China and the US, suggesting tax‑sensitive demand.
The earlier divided opinion about cutting ticket prices to reduce tax is particularly important here because, despite the ticket cap in Southern states, there are still more screens than in the North region.
Yet, the MAI argued that a 5 per cent slab on "mass‑market tickets" could lower prices by roughly Rs 40 per ticket in many cities, which for a family of four is a saving of Rs 150–160—enough to significantly lift footfalls in Tier‑2 and Tier‑3 markets.
Industry bodies link lower GST directly to screen expansion targets, projecting that aggressive rationalisation could help India move towards 20,000 screens over 7–8 years by making small‑town projects viable.
Budget 2026 and likely impact channels
Pre‑Budget analyses of indirect tax reforms suggest three channels that could shape the movie business: GST rates on tickets, input credits, and incentives for production and infrastructure.
If the Budget builds on GST 2.0 by explicitly extending the 5 per cent slab to a wider band of cinema tickets, exhibitors are likely to pass on part of the benefit to consumers, improving occupancy and concession sales, which together drive theatre profitability.
On the content side, the M&E sector is pushing for production‑linked incentives, faster GST refunds and lower TDS on service payments, arguing that too much cash is currently locked in working capital, squeezing mid‑sized producers.
EY–FICCI data showed that while overall M&E grew, theatrical revenues and subscription incomes remain below 2019 levels in real terms, meaning any tax or incentive relief could accelerate recovery but will not, by itself, solve structural issues like uneven content performance.
So far, the Economic Survey 2025–26 seems to have set a positive macro tone but offered no sector‑specific clues, leaving the film industry to pin its hopes on Sunday’s tax and incentive announcements.