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After Karnataka’s cess, Mumbai’s tax hike plan raises fear of pricier movie tickets
While the immediate financial impact on cinemas may be modest, the industry fears it could encourage other states to adopt similar measures.
Maryam Farooqui
September 24, 2026 / 06:46 IST
movie theatre
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Just days after Karnataka’s decision to impose a 2 percent welfare cess on cinema tickets from September 30 sparked concerns among exhibitors, a proposal by the Brihanmumbai Municipal Corporation (BMC) to increase theatre tax on multiplexes by nearly 6.7 times has reignited worries about a growing patchwork of local levies on the cinema exhibition industry.
The BMC has proposed raising the theatre tax on multiplexes in Mumbai from Rs 60 per show to Rs 400 per show. While the proposal is still awaiting approval from Maharashtra’s Urban Development Department, analysts say it underscores a broader trend of local bodies and states seeking additional revenue streams despite the introduction of the Goods and Services Tax (GST), which was intended to subsume most entertainment taxes.
While the quantum of individual taxes may remain manageable, Karan Taurani, Executive Vice President at Elara Capital said the emergence of additional levies across multiple states/local bodies represents an incremental regulatory overhang for the exhibition industry.
On PVR INOX, he expects the impact on FY27 earnings to be around Rs 3.7 crore, or 0.4 percent of estimated EBITDA if the additional tax comes into effect from October.
“PVR INOX has around 254 screens in Maharashtra, of which we estimate roughly 150 are in Mumbai. Even if the company absorbs the entire increase, the annual EBITDA impact works out to about Rs 7.4 crore, or roughly 0.8 percent of our FY27 EBITDA estimate,” Taurani said.
But the larger issue is the re-emergence of local taxes over and above GST.
“The concern is not necessarily the quantum of one tax. The concern is the precedent. If more states or local bodies start introducing similar levies, the cumulative impact could become meaningful,” he said.
The concern comes against the backdrop of Karnataka’s upcoming 2 percent cess on cinema tickets. While exhibitors have said the immediate financial impact may be modest, the industry fears it could encourage other states to adopt similar measures.
Multiplex Association of India (MAI) President Kamal Gianchandani has argued that the Karnataka levy runs contrary to the spirit of GST and could create a “tax-on-tax” situation. He warned that any additional tax ultimately affects affordability and demand. A Rs 300 ticket, for instance, would attract an additional Rs 6 cess under the Karnataka regime.
“Every increase in tax has a negative impact on demand. Tough to quantify it, but it is definitely not a positive thing for the business,” Gianchandani told Moneycontrol earlier. He also said the industry was evaluating whether exhibitors would absorb the additional cost or pass it on to consumers.
India’s exhibition sector has already seen local levies survive alongside GST in certain markets. Taurani pointed out that within Greater Chennai Corporation, entertainment tax on new films is currently 8% for Tamil films, 15% for other Indian-language films and 20% for English/foreign-language films. Kerala similarly levies local entertainment tax over and above GST, at 5% for tickets up to Rs 100 and 8.5% for tickets above Rs 100.
For live entertainment players, the broader concern is maintaining affordability as consumers face rising entertainment costs.
“India’s live entertainment industry is at an inflection point. Taxation must strike a balance between revenue objectives and keeping experiences accessible,” said Rohit Dalmia, Chairman and Managing Director of CineNow.
“A predictable, growth-oriented framework will be critical to attracting investment, expanding audiences and building a globally competitive entertainment ecosystem,” Dalmia added.
Maryam Farooqui is Senior Correspondent at Moneycontrol covering media and entertainment, travel and hospitality. She has 11 years of experience in reporting.
first published: Sep 24, 2026 06:46 am
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Maryam Farooqui
