GST or Goods and Services Tax — A new law, a new tax which will bring with it new challenges to face.
What exactly is GST Bill, you ask?
GST bill is the Goods and Services Tax which is going to be the biggest indirect tax reform, providing a uniform and simplified way of Indirect taxation in India. Once introduced GST will replace a number of other taxes like VAT, CST, Service tax, CAD, SAD, Excise, Entry tax, Purchase tax etc.
As per the final proposed GST Bill, a four-tier structure, i.e; 5 per cent, 12 per cent, 18 per cent and 28 per cent has been set, where tax will be levied at multiple rates ranging from 0 to 28 per cent.
While economy’s biggest reforms are coming in place, it’s going to bring changes in the field of events industry as well. And just like you, we have also anticipated how it is going to affect the event planning business.
So, in this article, we are going to cover the major segments that will affect the entire budget involved in event planning and execution. Have a look!
The overall food cost of the restaurant kitchen is likely to decrease under the new GST regime. Edible oil, tea, coffee and spices which are currently taxed 3–9 per cent will be dropped to 5 per cent while goods taxed at 9–15 per cent at present will be taxed at 12 per cent.
Items that presently fall in the 15–21 per cent range will drop to 18 per cent, thus affecting the overall food cost.
Though the above-mentioned rates are exclusively for the indoor catering at restaurants, the rate for supply of food/drinks in outdoor catering is capped at 18 per cent.
Hence, the tax rates for the events which are held indoors will be around 18 per cent while lifestyle events/exhibitions happening at a 5-star convention hall will have to pay maximum tax- 28 per cent.
Currently, among all mediums, print is the only one that is exempted from any form of indirect tax. But it is also one of those sectors that could be in for changes.
And that change is not a good news for the print industry. Now, whether they will have to pay tax at the uniform rate of 18 per cent or higher, is going to be finalized as soon as the further details of the bills are worked upon.
Although, buying of print space in advertising is going to be uniform at the rate of 5 per cent. This means purchasing an advertising space, be it in print or television media, is going to be cheaper from now on.
Travel & Transport:
The tax rate of transportation through Rail/Air has been decreased to 5 per cent from 15 per cent presently be it in terms of personal travelling or cargo.
Since GST is an indirect tax, ultimately tax benefit will be passed by the industry to consumers and hence its impact will be shifted. Here due to lower cost to the consumer, a great impact on this industry may be seen during the transition period and will stabilise thereafter.
Petroleum products are out of GST. Therefore, there will be no loss or profit on this count. Hence, it is a good news in terms of transportation and logistics.
From the above scenario, it is evident that personal travelling for Delegates and Speakers as well as logistics and cargo rates are going to be decreased.
While budget hotels will attract low — or even nil in the case of those charging less than Rs 1,000 a day for rooms — GST rates, those charging Rs 5,000 and more room tariff per day will have to pay 28 per cent,. Restaurants in such hotels, too, will have to pay 28 per cent GST.
Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having room tariff Rs.1000 and above but less than Rs.2500 per room per day will have to pay 12 per cent GST.
Therefore, event planners will have to spare less room for accommodation as they will be free from multiple taxes of state VAT, luxury tax, etc.
The Central GST (CGST) Bill — one of the four legislations introduced in Parliament — provides that any lease or letting out of the building, including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.
According to the sources, the government is arming itself with powers to levy goods and services tax (GST) on all rental income but is unlikely to impose the tax on individuals renting out commercial properties. Currently, service tax levied on the rental income of the commercial property is 14 per cent.
“Event Industry is definitely going to experience some budget cuts with GST implementation but it’s too soon to say how adversely will it affect the industry as a whole. Though Event Planners are definitely hoping for the final rates and are looking forward to having some positive changes.”
Nevertheless, for mega event companies, it is overall a positive news because the entertainment tax on events has got subsumed in GST.
For example- if someone was to watch an IPL match in Mumbai, he had to pay 25 per cent entertainment tax and 15 per cent service tax, which means almost 40 per cent on the ticket price. That will go down to 28 per cent rendering more ticket sales.
And most of the third party services have been capped at 28 per cent tax which will free the MICE Industry of India from the burden of multiple taxation systems.
We are yet eager to look at the final tax rates and hope for the smooth execution between Event Planners and Government.