The Impact of TCS Tax Policy on Event Ticketing in India

As per Statista, event ticketing in India brings about a revenue amounting roughly to US$1,223m in 2018. Revenue is expected to show an annual growth rate (CAGR 2018–2023) of 17.8%, resulting in a market volume of US$2,779m by 2023. With financial growth, the Indian event ticketing industry has also seen a major transformation in terms of technology as well.

In the current scenario, the MICE industry in India has heartily accepted the introduction of event technology in the way events are planned and executed. Basic event planning processes such as event registrations and ticketing have almost entirely been shifted to the digital platform.

Talking about event ticketing, a lot of new rules and regulations by the government have played a major role in shaping the ticketing industry as it is today.

The introduction of a major tax law back in 2017, the elimination of all taxes, amalgamating them into one Goods and Services tax has majorly affected the way tickets are priced apart from the pricing of the services that provide such event ticketing platforms.

Flashback: How the Goods and Services Tax Have Affected the Indian Events Industry

The Goods and Services Tax was introduced by the government back in 2017 as an integrated tax replacing taxes like VAT, CST, Service tax, CAD, SAD, Excise, Entry tax, Purchase tax etc. 

As per the final proposed GST Bill, a four-tier structure, i.e.; 5 per cent, 12 per cent, 18 per cent and 28 per cent has been set, where tax is levied at multiple rates ranging from 0 to 28 per cent. The tax system was to affect the prices of a lot of event budget items such as catering, transportation, accommodation and of course, event ticketing.

Click here to read more about how GST affected the Indian events industry.

Another addition to this redefining law, the government recently introduced the TCS (Tax Deduction at the Source) under the head of Goods and Services Tax which has left e-commerce platforms apart from event organizers who use these platforms for events, in a race to compliance.

How does TCS work?

According to this taxation policy, the e-commerce platforms providing services to suppliers share equal responsibility as the supplier themselves in terms of the tax deduction.

In terms of event technology, the event tech vendor providing a ticketing platform to the organizers is considered to be the e-commerce platform while the organizer is considered to be the supplier.

As per policy, 1 % TCS has to be deducted at the source and has to be paid to the government within 10 days towards the end of the month during which the transaction has been carried out.

So, let’s say the ticketing transactions for an organizer’s event has been completed in the month of October and the invoicing for the same has also been completed by October.

Being a part of the Goods & Services Tax that came into practice back in 2017, the way TCS is deducted is different for in-state and out of state transactions. 

In case if the ticketing transaction is with an organizer registered within the same state, TCS has to be divided into 0.5% CGST (Central Tax) and 0.5% SGST (State Tax). In case of transactions outside of the State, a 1% integrated tax will be deducted at source.

Another implication of this tax policy is the process of event registration. According to this policy, companies are required to register in all the States that they are operating in. 

So, for, e.g. you are an event company operating in Mumbai while your attendees and your event are in Delhi from where the ticketing transactions will be taking place, you must be registered both in Maharashtra and in Delhi.

This tax cut is thereby registered on the organizer’s electronic cash ledger that is connected to their GSTIN (GST Registration number). Organizers can claim this tax while filing for Income Tax returns.

Mandating of registration is not limited to Indian companies. Foreign companies operating in the e-commerce sector in India are also required to register in all the States that they are operating in as well as follow this tax policy while carrying out transactions. Hence the law is implied on all foreign companies conducting events in say, Hyderabad.

What will be the effect of this tax policy on the events industry?

1. Higher ticket prices

One of the most probable implications of this tax policy is the rise in ticket prices for events. As per the policy, there will be dual tax cuts on event tickets, one at the source, i.e. the vendor and another tax cut on the organizer’s end. 

Though the organizer can write TCS off as a tax benefit, there is a possibility of ticket prices going high all together in terms of balancing the event budget and the immediate tax cuts. Hence it is very much a possibility that event ticketing may see a price rise in the future due to this added taxation.

2. Shared responsibility between vendor and organizer

When it came to taxing for event tickets, the responsibility of the transaction and the filing of tax were solely with the event organizer. However, with this policy, the responsibility shall now be shared by the event organizer a well as the event tech vendor through whom these transactions shall be taking place. 

Hence the taxes will be filed by the event tech vendors as well as the event organizers. In this case, organizers must make sure that they pick a vendor that is in compliance with the entire tax policy and is trusted in terms of completing the filing process.

3. Tedious taxing in terms of ticketing for international events

The entire process of compliance with this tax policy including registering in multiple states where the transactions are taking place can get a little tedious, especially for event organizers abroad. MICE tourism is on the rise in India. 

However, these tax policies may prove to be a tedious step that companies abroad might reconsider taking while investing in the Indian events industry. The tax policy will make event ticketing even more complicated for companies abroad looking to invest in India as a probable events destination.

 We might just have to wait and see how this scenario plays out for international events and event organizers.

One thing is for sure that the event ticketing industry in India is bound to be affected by this tax policy. How this taxing policy will pan out exactly though, is just a matter of time.

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