DTH industry seeks tax sops

NEW DELHI: The direct-to-home (DTH) platforms have made a strong plea for doing away with the entertainment tax levied by the states and the 10.3 per cent service tax levied by the Centre.

The DTH Operators Association of India has said that the entertainment tax is unethical as only the broadcasters or those who generate programmes should be taxed.

Harit Nagpal, President of the Association, told that the entertainment tax varies from state to state and the average percentage was around 10 per cent.

Nagpal, who is MD and CEO of Tata Sky, said all the DTH players have to pay customs duty on set-top boxes (STBs) imported into the country, which was as high as 20 per cent. This was unethical when the country was resorting to digitisation.

All the DTH operators also had to a pay huge amount as licence fee.

Nagpal regretted that the industry had for long been hearing about Goods and Services tax (GST), but this had still not come into effect. He hoped that the Negative List to be prepared by the Finance Ministry will help the industry.

Meanwhile, Dish TV called for the basic customs duty on digital head-end and STBs to be reduced to zero for three years to give a boost to digital conversion.

In its demands from the Finance Ministry for the new budget, Dish TV also wants the double charge of service tax and entertainment tax to be subsumed in the GST. It said there should some relief in licence fee from the existing 10 per cent to 6 per cent as agreed by Telecom Regulatory Authority of India and the Information and Broadcasting Ministry.

Noting that Dish TV expects positive move from Government on taxation, it said there is heavy taxation on the DTH industry which is already paying multiple taxes such as service tax, entertainment tax, licence fee and VAT.

It added that the double charge of service tax and entertainment tax should be subsumed in GST.

Bharti Airtel CEO (DTH/Media) Shashi Arora said the high tax of 35 per cent in toto does not give the DTH sector impetus to grow at the high rate and help digitisation. Levying of service tax, licence fees, and entertainment tax in addition to customs duty makes the package expensive for the common user and also discriminates against analogue cable which is free from paying these taxes.

He told that the government should have a relook at Entertainment Tax which is as high as 25 per cent in some states.

Since a DTH setup is far more transparent as against a local analogue cable, Arora said this tax appears unfair and anti-DTH consumer. "We recommend the government brings in the Goods and Services tax (GST) and covers DTH under it," he added.

He said there was currently a dearth of quality indigenous manufacturers of the STBs in India capable of the scale required for DTH. The number of manufacturers of chip sets in the world was also very small, of which only a handful are based out of India. Thus, 95 per cent of the demand for STBs is met via imports. In order to drive digitisation, the custom duty on digital STBs needs to be brought down.

Arora added: "We would also request an urgent rationalisation of the 10 per cent licence fee levied on the DTH platform. The bulk of the costs of the DTH operator is content, that is the money paid for carrying paid channels on the platform. It is our recommendation that either the calculation is changed to adjusted gross revenue subtracting the content cost from gross revenue or the amount brought down to 6 per cent of gross revenue. This will go a long way in enabling the industry to overcome its losses."

He added: "Today, every DTH operator from the largest to the smallest is bleeding and the appetite for fresh investment will decline unless this is corrected quickly."

Arora said the industry expected that allowing the use of infrastructure of DTH companies for catering to neighbouring countries (with the same infrastructure) should be deemed as exports of services.

He was confident that with the government?s support and reform-led approach, the DTH sector would be in position to usher in the second telecom revolution. "We hope for a progressive budget that is growth oriented in spirit," he added.

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