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NEW
DELHI: The Indian Broadcasting Foundation, the largest body
of television channels in the country, has urged the Finance
Ministry to exempt CVD, cess charges and additional duty on
set-top boxes (STBs) for the next 10 years.
Digital
cable TV would get a boost if STB prices fell, IBF said.
In
a pre-budget memorandum presented to the Revenue Secretary
and other senior officials in the Ministry recently, the IBF
has also demanded that the concessions given to the IT industry
should be extended to broadcasting, particularly in view of
the convergence of technologies.
For
example, as of now, customs duty, CVD, and cess for broadcast
equipment put together is 36.64 per cent whereas it is only
21.32 per cent for computers and 4 per cent for cell phones.
The
Foundation says that it is the most heavily and unfairly taxed
Industry.
Apart
from service tax, states impose very high, even up to 35 to
40 per cent entertainment tax as also sales tax, stamp duty
etc.
The
base of the fringe benefit tax for the broadcasting industry
has been kept at 20 per cent whereas the base for six industries
including computer software industry is only 5 per cent.
The
IBF says that the total service tax at 12.36 per cent on the
total television media advertising revenue of Rs 74 billion
works out to Rs 9.15 billion. Of this, the service tax liability
of Doordarshan is Rs 1.01 billion and that of other channels
is Rs 8.14 billion.
Of
the total ad revenue, the share of Doordarshan is Rs 8.18
billion and private channels is Rs 65.82 billion.
The
customs duty should be zero to make STBs affordable to consumers
and no excise duty to encourage indigenous production of STBs.
The
government should exempt the broadcasting industry from service
tax as in the case of print media, the IBF says.
The
government had in March 2005 granted exemption to the service
providers (small cable operators) whose aggregate value of
taxable service for a financial year does not exceed Rs 400,000.
There was need for a clarification that the exemption granted
is only in respect of service tax payable on services provided
and does not extend to service tax charged on services procured
by cable operators. Cable operators, thus, are liable to pay
service tax charged by broadcasters and multi-system operators
(MSOs).
In
this regard, the service tax authorities may be asked to launch
periodic campaigns to ensure that all last mile cable operators
are registered and display their registration certificates
prominently.
In
view of the fact that broadcasting is included in Entry No.
31 and is being treated as a “Service” under Entry
No. 92 C of List I of Seventh Schedule of the Constitution,
the state and union territory governments may be directed
not to levy entertainment tax, sales tax, etc. on the broadcasting
industry inclusive of distribution services.
There
was need to expand the definition of Industrial Undertaking
under Section 72A of the Income Tax Act, 1961 to include Electronic
Media, that is, TV Broadcasting.
In
order to enable cable operators invest in infrastructure for
achieving time bound digitalisation, a “National Fund”
may be created to provide soft loans etc.
Television
industry is the electronic version of the print media providing
information, entertainment and education to the citizens of
India. Though service tax is levied on Broadcasting media,
print media is not attracting service tax even though it enjoys
a larger share of advertising revenue.
According
to the IBF, The total estimated advertisement revenue for
2006-07 was Rs 164 billion of which 55 per cent was generated
by the print media (Rs 90 billion) and 45 per cent by TV channels
(Rs 74 billion).
The
Ad spend to GDP ratio for India is one of the lowest at 0.34
per cent. It is 1.3 per cent for USA, 1.0 per cent for Australia
and even neighbouring countries in South East Asia like Malaysia,
South Korea, Singapore etc enjoy a high ratio of 0.8 per cent
to 1 per cent.
Without
government’s support like service tax holiday on advertisement
revenue, the potential cannot be exploited to the desired
extent. Service tax pulls down consumption and hence economic
growth. Lower consumption means lower overall tax revenues.
As
a result of the service tax, even the public service broadcaster
Prasar Bharati will have to increasingly depend on Government
grants while private TV channels (particularly news channels)
will have a hard fight to survive, the IBF points out.
At
the outset, the IBF points out that there are 122 million
Television homes in India and more than 71 million homes are
connected to Cable & Satellite TV and these are increasing
rapidly.
The
industry produces approximately 6,00,000 hours of original
programming annually for more than 300 TV Channels making
it one of the biggest in the world.
There
are over 56 million viewers of Indian television programming
in neighbouring countries and overseas, creating a positive
international image of India unlike any other media.
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