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New tax shakes Indian parks (2017/06/03)

A year ago in many of the country’s states, the tax rate was zero, but service tax of 15 per cent was added.  Now there is a new Goods and Services Tax that has taken the tax burden up to 28 per cent.  According to IIFL, a major financial services company in India, the new tax levels “puts the industry catering to outdoor entertainment for children and families on par with casinos, betting and race courses.  It also overlooks the essential role played by the industry in creating social infrastructure and attracting tourism.”  IIFL points out that the amusement park industry is still in its development phase and is highly capital-intensive, requiring significant investment in land and rides equivalent to €97m for mega parks and €14m for mid-sized parks.  It noted that although it is a very seasonal business, parks have to operator on a full capacity even during off seasons.  Despite thin margins, the Indian industry achieves cumulative revenue of €236m annually and employs 125,000 people.  Shirish Despande, president of trade association IAAPI, said: “This is a huge setback for our industry which in essence sets our very survival at risk.  Such high taxation is unsustainable for our business which already operates on paper-thin margins.”  IIFL points out that the GST in Australia is at 10 per cent, Singapore seven per cent, Japan five per cent and Malaysia six per cent.

 
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