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Budget 2017 Wish-list: MSOs demand industry status, rationalisation of entertainment & services taxes

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NEW DELHI: Annually various sectors of the Indian industry draw wish-list and hope that the government will grant them some relief during the presentation of the annual Budget of the country. MSOs are no exception and the All India Digital Cable Federation (AIDCF) has not only demanded an industry status, which will give it related financial incentives, but also rationalisation of various other taxes, including service and entertainment taxes.

“Grant us infrastructure status for the (distribution) industry and remove the 8 per cent AGR applicable for MSOs offering broadband via cable,” said AIDCF Secretary-general Saharsh Damani when asked by indiantelevision.com about what the organisation would like Finance Minister Arun Jaitley to announce during his Budget presentation on February 1, 2017.

AIDCF has also exhorted the government to grant them parity with manufacturing sector vis-a-vis u/s 2A as a disparity between the service and the manufacturing sectors is “adversely affecting” the growth and consolidation of service sector of which the MSOs are part of.

“The tax benefits under Section 72A of the Income-tax Act, 1961 in respect of amalgamation or demerger (carry forward and set off of accumulated loss and unabsorbed depreciation allowances) are currently limited to industrial undertakings or a ship, hotel, aircraft or banking. The definition of industrial undertaking should be widened to include service industry, broadcasters and content production companies,” Damani said.

The AIDCF, which is said to be a new and digital avatar of MSO Alliance, would also like removal of dual applicability of service and entertainment taxes on the cable TV.

According to the apex body of MSOs, till the time GST (Goods and Services Tax) comes in place, entertainment tax paid to a state government may also be made creditable against the service tax liability of the cable TV sector. What does it mean? When a cable TV network, for example, pays an entertainment tax of Rs 100, then it should be able to adjust the same against the service tax payable and get a credit there on, AIDCF said.

“This will be a short term measure, but will give higher declaration of entertainment tax and will bring in sufficient numbers to ensure that (overall revenue) collection of the government on service tax does not drop,” AIDCF’s Damani explained.

Originally GST was supposed to have rolled out from April 1, 2017, but because of political wrangling and some states raising doubts on their share of the tax collected under a GST regime, Finance Minister Jaitley, according to media reports, has opined the new tax regime could be rolled out some time middle of 2017.

Apart from that, AIDCF has also urged the government to rationalise indirect taxes like import duties on network equipment. Further, the organisation has suggested allowing use of USO (Universal Service Obligation) Funds for broadband infrastructure expansion would greatly benefit the industry.

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