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The media and entertainment (M&E) industry is on the cusp of a sea change with the digitisation wave. Not just broadcasting but other sectors with in M&E—films, radio, animation and gaming—are also eyeing transformation with the advent of new technologies and an ever increasing appetite of Indian consumer for entertainment.
However, what they are eyeing is support from the government, not monetary, but in form of rationalised tax structure.
The biggest issue that the industry is facing is of multiple taxation. Across sectors, media and entertainment executives are demanding rationalisation in taxes and an enabling environment. The direct and indirect taxes levied on different sectors are as high as 40-56%.
In the Broadcasting sector, for instance, the cable and DTH companies have been facing multiple taxation and custom and import duty issues. The DTH industry has been asking for a reduction in the license fee from 10% to 6%, while they also want to bring DTH on the negative list and get exemption from Service Tax.
Harit Nagpal, MD & CEO, Tata Sky & President, DTH Operators Association of India said, “DTH is growing as fast as it can and the growth has been phenomenal. In fact, the DTH industry is contributing revenues, to the government and the broadcasters, that are disproportionate to its volume compared to the cable industry. Now with the digitisation mandate, DTH would only make further in roads. But the industry requires heavy investments during this high growth stage and these are impacted by high and uneven rates of tax charged to us. The current tax structure exceeds to around 35% of the revenues when you look at the various taxes and revenue share arrangements with the government. Given the current scenario, Taxes and revenue-share put together is a big hurdle for a nascent industry which is yet to break-even.”
The Federation of Indian Chambers of Commerce and Industry (FICCI) also has demanded a reduction of license fee in DTH and an infrastructure status for the cable sector.
FICCI said that both DTH services and cable services are at present reeling under the heavy burden of multiple taxation and levies such as license fee, service tax, entertainment tax, VAT on customer premises equipment (STB, Dish Antenna etc.) which cumulatively add up to as high as 56%, are acting as an impediment to the growth and development of these services.
“Such high multiple taxation and other levies vis-a-vis other sectors have resulted in these services becoming costlier and unaffordable for the masses. To ensure proper growth and development of this sector, the multiple levies/ taxation structure needs to be rationalised,” it said.
It also said that Cable TV and DTH service is essentially the transmission of programme which is taxed as “services” by Central Government and the same transmission of programme, is also considered as ‘entertainment’ services by the state governments and is also being taxed as entertainment tax. “Thus, these services suffer “double taxation”. So, it is recommended that the DTH & Cable TV services should be included in the negative list of service tax till the time GST comes into force,” it said.
To incentivise cable, it has demanded scheme for waiver of entertainment tax by State Governments for a period of 5 years for cable networks migrating from analogue to digital.”
Meanwhile, on the film industry, FICCI noted that the multiple tax structure on entertainment transaction is proving as a great blow to the industry. In addition to the entertainment tax as high as 60% in UP and 45% in Maharashtra, service tax is also levied on the multiple transactions along with VAT, Stamp duty & others. “The film sector has, in most countries, been given a preferential treatment with GST being imposed at a rate that is far below the standard rate,” Ficci has mentioned.
FICCI said the industry deserves to be nurtured, encouraged and supported. “For this an important step would be to do away with multiple tax structure that is prevailing in the industry.” .
According to Hiren Gada, director Shemaroo entertainment, the service tax on production has put the margins under pressure for the film industry as the cost has gone up by almost 12%. He also wants the excise duty on VCDs and DVDs to be abolished as it is a pure expense on the sector that is already reeling under piracy issues.
“If GST can be fast tracked, it will be a boon for the industry. There are larger opportunities if government takes initiative and play a catalysing role in the growth of the M&E Industry,” Gada opined.
The industry is also asking for exemption of input services for film making from service tax and exemption of service tax on digital cinema services apart from enabling institutional financing options.
http://www.business-standard.com/ar...-rationalisation-of-taxes-113022100539_1.html
However, what they are eyeing is support from the government, not monetary, but in form of rationalised tax structure.
The biggest issue that the industry is facing is of multiple taxation. Across sectors, media and entertainment executives are demanding rationalisation in taxes and an enabling environment. The direct and indirect taxes levied on different sectors are as high as 40-56%.
In the Broadcasting sector, for instance, the cable and DTH companies have been facing multiple taxation and custom and import duty issues. The DTH industry has been asking for a reduction in the license fee from 10% to 6%, while they also want to bring DTH on the negative list and get exemption from Service Tax.
Harit Nagpal, MD & CEO, Tata Sky & President, DTH Operators Association of India said, “DTH is growing as fast as it can and the growth has been phenomenal. In fact, the DTH industry is contributing revenues, to the government and the broadcasters, that are disproportionate to its volume compared to the cable industry. Now with the digitisation mandate, DTH would only make further in roads. But the industry requires heavy investments during this high growth stage and these are impacted by high and uneven rates of tax charged to us. The current tax structure exceeds to around 35% of the revenues when you look at the various taxes and revenue share arrangements with the government. Given the current scenario, Taxes and revenue-share put together is a big hurdle for a nascent industry which is yet to break-even.”
The Federation of Indian Chambers of Commerce and Industry (FICCI) also has demanded a reduction of license fee in DTH and an infrastructure status for the cable sector.
FICCI said that both DTH services and cable services are at present reeling under the heavy burden of multiple taxation and levies such as license fee, service tax, entertainment tax, VAT on customer premises equipment (STB, Dish Antenna etc.) which cumulatively add up to as high as 56%, are acting as an impediment to the growth and development of these services.
“Such high multiple taxation and other levies vis-a-vis other sectors have resulted in these services becoming costlier and unaffordable for the masses. To ensure proper growth and development of this sector, the multiple levies/ taxation structure needs to be rationalised,” it said.
It also said that Cable TV and DTH service is essentially the transmission of programme which is taxed as “services” by Central Government and the same transmission of programme, is also considered as ‘entertainment’ services by the state governments and is also being taxed as entertainment tax. “Thus, these services suffer “double taxation”. So, it is recommended that the DTH & Cable TV services should be included in the negative list of service tax till the time GST comes into force,” it said.
To incentivise cable, it has demanded scheme for waiver of entertainment tax by State Governments for a period of 5 years for cable networks migrating from analogue to digital.”
Meanwhile, on the film industry, FICCI noted that the multiple tax structure on entertainment transaction is proving as a great blow to the industry. In addition to the entertainment tax as high as 60% in UP and 45% in Maharashtra, service tax is also levied on the multiple transactions along with VAT, Stamp duty & others. “The film sector has, in most countries, been given a preferential treatment with GST being imposed at a rate that is far below the standard rate,” Ficci has mentioned.
FICCI said the industry deserves to be nurtured, encouraged and supported. “For this an important step would be to do away with multiple tax structure that is prevailing in the industry.” .
According to Hiren Gada, director Shemaroo entertainment, the service tax on production has put the margins under pressure for the film industry as the cost has gone up by almost 12%. He also wants the excise duty on VCDs and DVDs to be abolished as it is a pure expense on the sector that is already reeling under piracy issues.
“If GST can be fast tracked, it will be a boon for the industry. There are larger opportunities if government takes initiative and play a catalysing role in the growth of the M&E Industry,” Gada opined.
The industry is also asking for exemption of input services for film making from service tax and exemption of service tax on digital cinema services apart from enabling institutional financing options.
http://www.business-standard.com/ar...-rationalisation-of-taxes-113022100539_1.html
