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It
was brief to say the least. The amount of time that finance
minister Yashwant Sinha devoted to the entertainment sector
in his speech to parliament while presenting the Union Budget
2002-2003 that is.
The key announcements Sinha has made relating to the entertainment,
film and television industry in the Union Budget announced
today are:
* Rather than removing that 5 per cent service tax as sought
by the entertainment industry, cable operators as well as
event management companies have also been brought under
the purview of this levy.
*Customs duties on studio equipment and earth stations has
been reduced from 35 per cent to 25 per cent. Specifically
referring, to the duty reduction on earth stations, Sinha
said this was keeping in mind India's potential to become
the uplinking hub for South Asian countries.
*Budgetary allocation to the information & broadcasting
ministry up 22 per cent to Rs 4150 million.
*Overseas joint venture investment limit for Indian companies
has now been upped to 50 per cent of net worth from the
earlier 25 per cent. This is likely to work as an incentive
to Indian entertainment companies to set up subsidiaries
abroad.
*A 50 per cent tax exemption to the those operating multiplex
theatres for the next five years. The catch appears to be
that the relief is applicable only for multiplexes that
come up in rural areas.
*Corporate tax on foreign companies operating in India brought
down from 48 per cent to 40 per cent. However, it should
be kept in mind there is a 5 per cent surcharge on corporate
tax that has been slapped across the board. This means a
2 per cent addition to be factored in. Therefore the actual
payout is 42 per cent.Still, considering that corporate
tax on Indian companies today stands at 35 per cent, this
is likely to further incentivise foreign players to set
up wholly owned subsidiaries in India.
All in all therefore, broadcasters like Zee, Star and Sony
that are basically foreign owned entities, should not have
too much to complain about. The same cannot be said for
the cable industry though.
We will be adding more details as and when they become available
to us.
Industry
captains offer mixed reactions to Budget 2002
Details
of Yashwant Sinha's budget speech
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