MSOs to petition finance ministry on service tax

NEW DELHI: The cable industry, especially the multi-system operators (MSOs) have not taken very well to a budgetary announcement relating to service tax and would be petitioning the finance ministry on the issue.

What's more, the MSOs feel that finance minister P. Chidambaram is subjecting them to "double taxation."

According to cable industry sources, the MSO Alliance, a newly-formed body of MSOs, is slated to petition the finance ministry on the issue of service tax either tomorrow or early next week.

In the budgetary proposals announced earlier this month, it has been specifically explained "cable operator service will include MSOs."

One of the points that would be highlighted in the petition is that since MSOs already pay service tax --- increased to 10 per cent from this financial year --- for cable service rendered through networks directly controlled and owned by them, bringing them under the tax net would amount to double taxation, which is not justifiable.

But most MSOs also don't have direct presence in many cities and even in a city too. While work through franchisees (like Hathway and INCablenet), others like Siti Cable have joint venture partners in a majority of places.

Another point that is likely to be brought up is that there is a "basic difficulty" in getting the service tax from the local cable operators, especially those who are franchisees and joint venture partners (as in the case of Siti Cable), as the LCOs don't declare their entire subscriber base.

MSO Alliance is a body of some of the big companies operating in this sector and comprises Rajan Raheja-controlled Hathway Datacom, Hindujas-controlled IndusInd Media (INCablenet), Sun group's parent company Sumangali (SCV), RPG Network, Trinity Platco and Zee Telefilms cable subsidiary Siti Cable.

However, if the MSOs admit in their petition to the government that LCOs under-declare, it may just go about strengthening the case of another section of the broadcast and cable industry that feels that gross under-reporting by the cable industry is resulting in huge losses to it.


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