Shares of multiplex operators INOX Leisure and PVR fell by up to 4 per cent today after announcement of GST rates in which they are bracketed in the highest category.
INOX Leisure shares went down by 3.91 per cent to end at Rs 276.60 and PVR fell by 2.32 per cent to close at Rs 1,483.90 on BSE.
PVR tumbled 7.83 per cent to Rs 1,400.10 in intra-day session and INOX Leisure fell by 4.39 per cent to Rs 275.20.
"These companies may be slightly unhappy that they have been bracketed in the highest category along with gambling and betting activities. That almost looks akin to imposing a "Sin Tax" on movies. However, multiplexes will benefit from subsuming of plethora of state and local taxes into one single tax and also from input credits," said Vaibhav Agrawal, Head of Research and ARQ, Angel Broking.
Entertainment tax will be merged with service tax under the GST and a composite 28 per cent levy charged on cinema services as well as gambling and betting at race course.
While the rate proposed for cinema halls is lower than 40 to 55 per cent currently, it may not result in a reduction in tariffs on cinema tickets as states continue to hold right to levy local charges on them.
The GST Council finalised four tax rates of 5, 12, 18 and 28 per cent for services, including telecom, insurance, hotels and restaurants, under the biggest tax reform since Independence.
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