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NEW
DELHI: The Foreign Direct Investment (FDI) limit for News
and Current Affairs television channels should be raised to
at least 49 per cent in accordance with the recommendations
of the Telecom Regulatory Authority of India in 2008.
Reiterating
this, the Federation of Indian Chambers of Commerce and Industry
(FICCI) has in its pre-budget memorandum said that it is "also
imperative to align the foreign investment caps in broadcasting
carriage with that of Telecom, in keeping with a technology
agnostic approach so that the industry can achieve its full
potential.'
FICCI
said in its memorandum to Finance Minister Pranab Mukherjee
that it is a settled economic position that FDI is a far more
superior purveyor of funding compared to other means of foreign
investments, given its inbuilt long term commitment.
There
is a need to provide fillip to the importation and indigenous
manufacture of set-top boxes (STBs) and so import and excise
duties on STBs should be subjected to a moratorium for three
years coinciding with the sun set date for analogue transmission
as laid down by Trai in its latest recommendations on digitisation,
FICCI said in the memorandum.
It
added further that the service tax applicable to the DTH industry
should be reduced by 4 per cent for three years to enable
it to sustain amid the multiple taxation regime afflicting
the sector as some States have levied entertainment taxes
on such services as well.
The
industry body said the cable sector needs to be given "Infrastructure"
status in order to garner domestic funding. The cable industry
that has grown for the last twenty years in an unorganised
manner has been catering to 90 million households by deploying
out dated analogue technology.
"This
has resulted in considerable loss to the government as tax
collections have suffered owing to large scale under declaration
of subscriber base by the cable sector. This lack of transparency
has resulted in banks and financial institutions steering
clear from the cable sector, thereby impairing quality of
service, technological upgradation and the required switchover
to digitization with addressability," FICCI said.
Trai
had conservatively estimated that a sum of Rs 500 billion
is required to ensure the transition from analog to digital
technology in the cable sector.
"Granting
of infrastructure status to the broadcast infrastructure providers
namely teleport operators, multi system operators, local cable
operators, DTH operators, et al, shall go a long way to ensure
well rounded growth of the sector," FICCI said.
Noting
that the Finance Act 2010 had introduced a new Service Tax
category for Cinematographic/Copyrights services, FICCI said
that double taxation - service tax and VAT - was being levied
with some states having classified copyright as 'goods'. It
said there should be a mechanism to prevent this situation,
as it was causing hardship to the industry. This was hurting
the entire entertainment industry including cable TV sector
and cinema.
Under
the Act, the taxing entry for copyright services, temporary
transfer of, or permitting use of/enjoyment of copyright has
been made liable for Service Tax. "Effectively it appears
that all form of exploitation of copyright by the rights holder
will attract the levy of Service Tax," the industry body
said.
In
its recommendations relating to cinema, it said necessary
equipment and hardware for film production must be allowed
to be imported without the additional burden of customs duty.
The Draft Constitution Amendment Bill 2011 for Goods and Services
Tax imposes a significant burden on the film industry by allowing
the local bodies to levy a supplementary entertainment tax,
over and above the GST.
To
avoid complexities of taxation which is one of the main objectives
of GST, FICCI recommended that entertainment tax should be
fully subsumed in the GST without creating a window for their
levy at the local level.
It
also said multiplex operators should be exempted from levy
of service tax on property rentals, till GST is introduced,
and entertainment tax is fully subsumed in GST, to result
in seamless pass-through of such indirect taxes. Cinema exhibitors
should be exempted from levying service tax on Intellectual
Property Rights to be transferred to exhibitors (Multiplex
owners).
Multiplex
operators should be exempted from payment of duties on import
of cinema equipment, till GST is introduced, and entertainment
tax is subsumed in GST, to result in seamless pass-through
of these indirect taxes.
The
film industry should be entitled to take full credit of certain
'input services' which are commonly used for non-taxable as
well as taxable activities.
Asking
for a ten-year tax holiday for the animation industry, the
FICCI reiterated its demand for setting up Centers of Excellence
for the Animation, Gaming and VFX Industry which also offers
opportunities for applied and commercial and others type of
arts, on the lines of Indian Institutes of Technology and
Indian Institutes of Management.
There
was need to lift service tax on studios developing original
content and exempt Import Duty on Hardware for a Period of
10 Years.
There
should be a provision of 50 per cent reimbursable MDA (Market
Development Assistance) for travel and registration fees to
international market events. The Government should extend
support under MDA/MAI activity to exhibiting Indian companies
by setting Indian Pavilions in the world markets. There was
need to assist local production companies to go to international
markets, collect and disseminate information, and help support
the infrastructure needed for a healthy media market to develop.
FICCI
also said that to promote the domestic gaming market, Excise
Duty on local manufacture should be brought down from 12.5
per cent to zero duty (similar to film and music industry).
This will enable countervailing duty (CVD) to be brought to
zero as well. The effective reduction in taxes would be around
15 per cent.
Import
duty on consoles (Gaming hardware), which will increase the
installed base to enable the local developer ecosystem to
flourish, needs to be brought down to zero duty.
The
industry body wanted mandate to be given to commercial bankers
to treat animation sector on priority. This will enable them
to provide funds at concessional rate.
Furthermore,
encouragement should be given to entities through reduced
tax rates/incentives (exempt withholding taxes for overseas
payments to foreign artists stationed overseas) for exploitation
of own developed content in overseas markets.
The
MAT applicability for units undertaking animation work in
Special Economic Zones should be withdrawn to encourage export
of animated contents.
FICCI
wants the government to introduce subsidies like a CNC Fund
(in France) to fund animated content co-produced and developed
in India to enable Indian producers to be competitive on a
global scale.
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