Most multiplexes are selling e-tickets and are GST compliant. Last week during the 35th GST Council meeting, electronic ticketing system was made mandatory for multiplexes. The move is to keep a check on possible Goods and Services Tax (GST) evasion and to put an end to the sale of coloured tickets that a few cine complexes are still using.  According to the GST Council, multiplexes will be required to issue a tax invoice electronically and for this purpose, the electronic ticket issued by them shall be deemed to be a tax invoice.

So, what does the government mean by e-ticketing?

E-ticketing means computerised ticketing. A computerised ticket is where the information can be stored digitally. There are operators that issue manual coloured-paper tickets. Despite, having GST numbers, it has been difficult to track the tax calculation.  Hence, the GST Council has asked all multiplex operators to maintain a digital record of all the transactions, which is possible only when they issue computerised tickets. The council has mandated mentioning the GST invoice number, the GST number and the SAC code (Services Accounting Code) in the computerised ticket. This would help in the digital storage of the aforementioned elements, making it is easy to monitor and pull out data as compared to manual tickets. 

While the move will bring greater tax compliance, the question is how will it impact multiplex players?

Talking to Moneycontrol, Mukta A2 Cinemas Business Head Sachidanand Shetty said, “The impact will be positive as we’d have to do away with the dependency on manual tickets. We’re already e-ticketing compliant.” He added that the move is a step towards realistic sales with better control and swift reconciliation of box office revenue. This means that selling GST compliant movie tickets will lead to transparency and it will tell the actual collection of the Indian film industry.  However, most of the multiplexes are already selling e-tickets. According to Miraj Cinemas MD Amit Sharma, “E-ticketing is more symbolic in nature as over 90 percent cinemas and 100 percent multiplexes have already been doing e-ticketing for years." 

"Maybe the government is looking at it (mandatory e-ticketing for multiplexes) as a case model for other B-to-C (business to customer) places for implementation.” Inox Leisure, one of India’s largest multiplex chains, is also e-ticketing complaint. Inox Leisure CEO Alok Tandon said, “We have been issuing computerized movie tickets ever since Inox’s inception due to which making ticketing and billing systems GST compliant was a matter of hours for us.” 

“100 percent of our ticketing is computerized and GST compliant as it bears all the details like GST number, GST Invoice number and the SAC code,” he added.

Impact of mandatory e-ticketing on online ticket booking business

On whether mandatory e-ticketing will have an impact on the online movie ticket booking business, Shetty said that it “should boost the same by about 5 percent to the current sales of Mukta A2 Cinemas.”

“While multiplex chains more or less follow the same in all markets – Tier I, II and III – now the new rule will ensure compliance all across,” he added. In terms of online ticket sales, Inox sells 40-50 percent tickets online whereas, Mukta A2 cinemas is in the range of 35-40 percent.  Multiplexes are welcoming the move saying that e-ticketing will help maintain records in a digital manner, leading to more accurate computation of industry revenue and estimation of due taxes to be levied. TRA Research CEO N Chandramouli, however, has pointed out another aspect of this move.  He said, “While better tax compliance has been the objective of all governments, from even before democracies were popular, today it has become rigid, inflexible and obdurate.” 

“Tax is an earning of the government for services it provides, but businesses are left helpless if they have no room to negotiate the services they get for taxes they pay. If businesses become afraid of doing business because of the tax regime, I think the purpose is defeated at all ends,” he added.

Source:moneycontrol