Keep GST sen­si­ble: IAAPI

Dou­ble tax­a­tion on the amuse­ment in­dus­try has led to low foot­falls, laments Ajay Sarin, Pres­i­dent, In­dian As­so­ci­a­tion of Amuse­ment Parks and In­dus­tries (IAAPI).

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High tax­a­tion lev­els have been a bur­den to the whole in­dus­try and its con­se­quences have not spared even the amuse­ment sec­tor. The im­ple­men­ta­tion of ser­vice tax in the Union Bud­get 2015-16 that came into ef­fect last year, has had a cas­cad­ing ef­fect on the In­dian Amuse­ment in­dus­try, Sarin re­veals.

“Dou­ble tax­a­tion has ham­pered the growth of the In­dian amuse­ment in­dus­try as foot­falls to the parks have re­duced dras­ti­cally be­cause of in­crease in tick­ets rates. Amuse­ment parks are vis­ited mostly by fam­i­lies with about four to six mem­bers, and since they find the price very high, they look at other sources of en­ter­tain­ment. The high rate of tax­a­tion is dis­suad­ing new en­trepreneurs from en­ter­ing the in­dus­try with new for­mats and ad­di­tion­ally pre­vent­ing cur­rent in­dus­try play­ers from adding both capex and new cen­tres. En­trepreneurs, thus, are seek­ing to ex­plore other in­vest­ment av­enues,” he com­ments.

The state gov­ern­ment levies an en­ter­tain­ment tax which varies in states. In ad­di­tion, the amuse­ment sec­tor was im­posed a ser­vice tax of 15 per cent and un­like any other sec­tor the high op­er­a­tion cost, man power cost to ren­der ser­vices avail­able to set off the ser­vice tax paid is neg­li­gi­ble, ac­cord­ing to Sarin.

Keep­ing in mind these con­cerns, IAAPI is hop­ing for a sen­si­ble GST rate to neu­tralise these set­backs and re­it­er­ates the fact that global mar­kets where GST has been in­tro­duced, the tourism rate is half of the GST rate and un­der 10 per cent. Sarin high­lights, “Ev­ery­one recog­nises the GST rate as very cru­cial. It is im­por­tant to stim­u­late tourism de­mand be­cause it has an eco­nomic mul­ti­plier ef­fect on GDP and on sec­tors like jobs. The CAGR gen­er­ated in Asian coun­tries is 5.1 per cent with a world­wide CAGR of 2.1 per cent (North Amer­ica 2.7%, Europe 0.8% & Latin Amer­ica 2.8%) which is higher as com­pared to other coun­tries. There is huge po­ten­tial here.”

Sarin em­pha­sises that a ra­tio­nal tax struc­ture for the in­dus­try will help in in­creas­ing foot­falls to the amuse­ment park whereby rev­enues will not be af­fected be­cause in­crease in ticket sales will help in col­lec­tion of more tax. “Amuse­ment park oper­a­tors can have dy­namic pric­ing struc­ture to at­tract more foot­falls. This sce­nario will at­tract FDI in Amuse­ment sec­tor which is cur­rently neg­li­gi­ble and en­cour­age in­ter­na­tional play­ers to in­vest in In­dia.”

Ajay Sarin Pres­i­dent, In­dian As­so­ci­a­tion of Amuse­ment Parks and In­dus­tries (IAAPI)

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