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DTH operators groan under 30% entertainment tax in UP

MUMBAI: Already hurt by high taxation, DTH companies are in the midst of experiencing the worst pinch from the state of Uttar Pradesh.









The state government has imposed an entertainment tax of 30 per cent, forcing direct-to-home (DTH) companies to revise upwards their subscription package to consumers.


Market leader Dish TV has increased the price of its subscriber packages in the state by 30 per cent, while others are finalising on whether they should completely pass it on to the consumers or absorb part of it.



"We have no option but to pass on the entertainment tax to the subscribers," Dish TV COO Salil Kapoor tells Indiantelevision.com.


 

At present Dish TV has three packages for UP – Silver for Rs 125, Gold for Rs 210 and Platinum for Rs 312 per month.



“The UP government has assured us to review this tax sympathetically. Till now we were absorbing the additional entertainment tax burden but we have now decided to pass it on to all our new and old customers in the state. The increase in prices is applicable from 2 September,” Kapoor adds.



Meanwhile, in order to offset the increased cost, Dish TV will air free movies on its movie-on-demand service to the tune of the entertainment tax component. The company clarified that in case any customer shifts residence outside UP, then the additional cost would not be applicable.



Tata Sky is in the process of hiking the subscriber packages on account of the entertainment tax. Says Tata Sky MD and CEO Vikram Kaushik, “We have very little option but to pass on the entertainment tax levied by the state government to our consumers. We are finalising on hoe much the increase should be.”



As per industry estimates, UP contributes to 10-15 per cent of the total DTH subscriber base in the country.



Among the other players, Reliance Communication’s Big TV, which claims a subscriber base of 150,000, is also weighing the situation. Big TV CEO Sanjay Bahl says, “We are evaluating our options. So far we have not decided on whether we should increase the prices.”


Airtel Digital TV, the latest DTH entrant, believes that the entertainment tax would be detrimental for the DTH industry. “The 30 per cent entertainment tax will affect the industry adversely. We are trying to see that our customers don’t get affected by this. But we are weighing our options,” avers Airtel Digital TV marketing head Sugato Benerjee.



The cable TV sector will also have to bear the burden of a 30 per cent entertainment tax. DTH companies, however, say they are particularly at a disadvantage as the cable operators hide on their subscriber base.


DTH services are subject to multiple taxation which includes a licence fee of 10 per cent on gross revenue to the government.

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