Karnataka High Court scraps 2% extra tax on movie tickets

There is relief for moviegoers in Karnataka. The Karnataka High Court has struck down a 2% extra tax that was being levied on tickets sold at cinemas and multiplexes. The court said the law under which this tax was being collected has not yet formally come into force, so the tax cannot be imposed on viewers until the law is implemented.

The case was linked to a petition filed by the Multiplex Association of India, PVR INOX Limited and one of its shareholders, Shantanu Pai. They had challenged both the 2% tax on tickets and the government orders issued to collect it.

The Karnataka government had proposed setting up a welfare fund for people working in the film and cultural sector under a 2024 law. To raise money for this fund, the plan was to levy a tax of 1% to 2% on earnings from cinema tickets and certain other services. This also included earnings from TV channels and OTT platforms.

The petitioners argued that as long as this law has not been formally implemented, it is not valid to collect the tax merely through a circular or administrative order. The Karnataka government had issued a circular on August 29 directing cinemas and multiplexes in the state to start collecting the 2% extra tax on ticket prices from September 1.

The petitioners told the court that since the 2024 law has not yet come into force, this extra charge cannot be collected from customers on the basis of a government circular alone. During the hearing, the Karnataka government told the court that the order issued on August 29 had been withdrawn on September 9.

Following this development, tickets at cinemas and multiplexes in Karnataka will now be available without the extra 2% tax, making movie viewing cheaper for audiences than before.