Movie tickets may now cost more

MUMBAI: Your movie ticket is likely to get even more expensive. The already steep ticket rates are all set to go up by 10-15% as the exhibition business has been brought under the service tax net. The budget 2007 has proposed that commercial property rentals will be subject to service tax, hitting most retail formats. Multiplex owners are unhappy with the additional burden, considering an already existing entertainment tax.

“We have no option but to recover this additional tax burden by passing it on to cinema goer. We will have to look at increasing ticket prices along with food and beverage costs, to ensure that our bottom line is not impacted,” said a top executive of a leading multiplex chain. However, the exhibition sector has come together to make an official appeal to the finance minister, asking for an exemption for the exhibition business.

“We are going to put forward our proposal to the minister, stating that given the fact that we are a relatively new sector, and all already paying entertainment tax, an additional burden of tax would directly impact our bottomlines” said Ajay Bijli, managing director, PVR Cinemas. Rental costs amount to 12%-15% of the total revenue earned by multiplexes. “The levy of service tax is likely to impact the net profit by 150-200 basis points. With the increasing clutter in the multiplex space, increasing ticket prices will be a difficult task,” Ambareesh Baliga, VP, Karvy Stock Broking, said.