Under GST, amusement parks are in the same slab as racecourses and gambling joints, which would be taxed at the rate of 28%
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The next time you plan to take your kids to the nearest amusement park, don't expect to get cheaper tickets. According to the Indian Association of Amusement Parks and Industries (IAAPI), despite being promised by the Central government that they would have to pay less under the Goods and Service Tax (GST), amusement parks have been included in the same slab as racecourses and gambling joints, which would be taxed at the rate of 28 per cent.
Service tax comes into picture
Speaking to mid-day, a visibly unhappy president of IAAPI, Shirish Deshpande said, "We have been included in the same slab as racecourses and gambling joints."
According to him, the amusement park industry falls under the entertainment duty section, the rates for which range between 5-25 per cent across the country. "When service tax was implemented a couple of years back, we initially did not have to pay. However, last year we were included in the list. Hence, apart from paying entertainment duty of 15 per cent, we also had to pay a 15 per cent service tax," he added.
Shirish Deshpande, president, IAAPI
When IAAPI put forward their grievances before the Finance and Tourism Ministry, they were promised that the matter would be taken care of once GST was rolled out. "Following implementation of GST, we were shocked to learn that the tax rate was 28 per cent. The amusement park industry had anyway started dying a year ago when the service tax was imposed, and now the tax rate has come down by just 2 per cent. If the GST was imposed at the rate of 15-18 per cent, then it would have been a lot of respite for us," he said.
'We're part of tourism industry'
Deshpande, who is also the CEO of Pan India Paryatan Pvt. Ltd., the company that owns Essel World and its counterpart Water Kingdom, said, "I felt really bad that we were included in the same slab as gambling joints. We are a part of the tourism industry, since people who come to Mumbai visit Essel World and Imagica." According to Deshpande, maintaining profits of amusement parks is not easy.
"We anyway work on a thin profit margin. Essel World requires more than 950 workers for its functioning and maintenance. Nearly, 35% of the costs incurred are solely for manpower, while another 30% goes for electricity and water expenses. This year, we haven't incurred losses, but we cannot increase the ticket prices." He also pointed out that the profit of Essel World and its counterparts had dropped to as low as 1.3% this year.
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