Karnataka’s 2% cess plan raises red flags for multiplexes and broadcasters

New Delhi: The Karnataka government’s proposal to levy a 2% cess on cinema tickets and television subscription fees has sparked questions about how much it will add to consumer bills and how the state’s media and entertainment (M&E) sector will absorb the cost.

The draft rules, issued on September 24, 2025, under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, earmark the cess to finance welfare benefits for registered cine and cultural workers. These include accident and health coverage, educational support, maternity benefits, and pensions.

The draft notification, issued by the Labour Department on September 24, 2025, specifies that the cess will apply to all movie tickets sold in single-screen theatres and multiplexes, as well as the total transaction value of television entertainment channels operating within Karnataka. The rate has been set at 2%, the upper limit allowed under the Act, which permits a cess between 1% and 2%. Collections from the cess are expected to be remitted quarterly to a welfare board, which will oversee the distribution of funds.

For cinema-goers, the levy will directly reflect in ticket prices at single screens and multiplexes. A Rs 200 ticket, for instance, would cost Rs 204 under the proposed framework. For television, the 2% will apply to the transaction value of subscription packages, meaning monthly household bills for cable and DTH services could inch up. 

While the incremental rise appears small in isolation, households with multiple subscriptions or frequent movie-goers may feel the pinch over time.

For multiplex chains, which already operate under tight margins and face regulatory interventions such as price caps, the new cess could reduce footfalls in a price-sensitive market. 

Industry players argue that even minor hikes can dissuade consumers in non-metro markets where discretionary spending is thin.

Television broadcasters, meanwhile, may face consumer backlash if they pass on the cess entirely. Absorbing the cost could dent already pressured subscription revenues, particularly at a time when digital platforms and OTT services are steadily eating into TV’s audience share.

The cess is expected to generate a significant pool for welfare, addressing long-standing demands for social security in the unorganised cultural sector. But it also introduces fresh compliance and pricing complexities for the M&E industry. The draft stops short of including OTT platforms, though a similar levy had been floated when the original Act was passed in 2024.

For the state’s entertainment ecosystem, the measure highlights a trade-off: stronger social safety nets for workers, but potentially slower growth for ticket sales and subscriptions if higher costs deter consumers.

The government has not announced a timeline for finalising the rules, leaving stakeholders in both the film and TV industries waiting to see how the additional levy will reshape costs and consumer sentiment.