Wider Scope for India’s Service Tax Proposed

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Feb. 25 – India’s Central Board of Excise and Customs (CBEC)  has proposed widening the scope for India’s service tax to include the entertainment business for the upcoming Union Budget 2010-11.

Currently, entertainment is separately taxed by states and as a service tax by the central government with no prevailing uniformity on taxation since taxes are paid on a case-to-case basis.

The entertainment business is taxed as event management defined as services related to planning, promotion, organizing or presentation of arts, entertainment, business, sports, marriage or any other event including consultations.

CBEC thinks the definition is not clear and recommends that all facets of entertainment and entertainment industry should be levied a service tax. The agency says there should be fixed rates to every step of the business: pre-production, production, post-production, launches, endorsements, advertising, marketing and distribution.

When India’s new Goods and Services Tax is implemented, service tax will fall under the Central Goods and Services Tax and entertainment tax will be classified under the state GST.

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