Mumbai cinema tickets may rise Rs 5-10 as BMC proposes sharp entertainment tax hike

MUMBAI: Mumbai’s movie tickets could get a little more expensive, as the city’s civic body proposes a sharp increase in the entertainment tax charged on cinema shows. The proposed levy is expected to have a relatively modest impact on audiences, with exhibitors and producers estimating a possible Rs 5-10 increase in average ticket prices.

The Brihanmumbai Municipal Corporation has proposed raising the entertainment tax on air-conditioned cinema halls and multiplexes to Rs 400 per show from the existing Rs 60. That is a jump of nearly seven times, although the levy is charged on a show rather than directly on every ticket sold. The proposal still requires approval from the Maharashtra government’s Urban Development Department before it can take effect. Until then, the existing rates remain applicable.

The increase could nevertheless ripple through the film business because the show tax is deducted before box office collections are divided between exhibitors and distributors.

Mumbai is particularly significant to the Hindi film business, with its strong concentration of multiplexes and single-screen cinemas and average ticket prices that are higher than the national average. The city is estimated to contribute around 20-25 per cent of India’s gross box office collections, making any change to cinema economics there closely watched by the industry.

A calculation shared by Karmic Films, based on seven shows and a gross collection of Rs 1 lakh, illustrates the impact.

Under the current structure, a gross collection of Rs 1 lakh, after accounting for GST of Rs 15,254 and a Rs 1,000 service charge, leaves around Rs 83,326 for sharing. With the proposed show tax, the amount would fall to around Rs 80,946.

That would reduce the amount available to both the exhibitor and distributor from roughly Rs 41,663 each to Rs 40,473 each, assuming an equal 50:50 split.

The calculation therefore shows a reduction of around Rs 1,190 in the distributor’s share on the example considered. The corresponding pressure on exhibitors could also encourage cinemas to adjust ticket prices to offset part of the additional cost.

Importantly, the proposed Rs 400 figure should not be read as a Rs 400 increase in the price of an individual movie ticket. It is a charge levied on the cinema for each show. The eventual impact on audiences depends on how exhibitors absorb or pass on the additional cost.

The proposal covers other cinema categories as well. Reports on the civic body’s proposal indicate a proposed Rs 200 per show levy for air-conditioned single-screen cinemas and Rs 90 for non-air-conditioned cinemas, alongside revised rates for other entertainment programmes.

For multiplexes, the proposed increase is the most pronounced. The existing Rs 60 rate has remained unchanged for years, making the proposed Rs 400 charge a substantial jump even though the actual burden is spread across all tickets sold for a particular show.

For consumers, that could mean a relatively small increase on the ticket rather than the headline tax figure suggesting a dramatic jump in cinema costs. Industry estimates cited in the proposal’s impact assessment put the likely increase in average ticket prices at around Rs 5-10.

The proposal is not yet final. The Maharashtra government’s approval and formal notification are required before the revised rates can be implemented. Until that process is completed, Mumbai’s cinemas will continue to operate under the existing entertainment tax structure.

For an industry already balancing rising operating costs, ticket pricing and revenue-sharing arrangements, the bigger concern may be how much of the new levy can be absorbed without putting further pressure on the theatrical business. In Mumbai, where the box office carries considerable weight nationally, even a small ticket-price adjustment could have a wider ripple effect.