Budget 2020 proposals offer few benefits to M&E industry: EY India

Some of the changes may have a material impact.


MUMBAI: As always, the industry's hopes from union budget 2020 were high. According to a report from EY India while the budget proposals offer few benefits to the industry, some of the changes may have a material impact which will need to be assessed.

“The budget proposals will provide relief to the foreign companies earning income such as license fees from making compliances in India, provide clarity and do away with avoidable tax litigation through reduction in withholding tax rate for technical fees as well as withholding tax provisions for e-commerce operators. New media and digital business qualifying under start up incentives will get additional impetus from the measures proposed. Reduction in newsprint import duties will help print industry which is going through a tough business cycle. Tax amnesty scheme for resolution of pending litigation offers an opportunity to reassess the tax game in the country,” the report adds.

The report states that the proposed alternate personal tax regime will be relevant to mass employment by the industry in its content production processes, however, it is difficult to determine whether the regime will provide a material differential cash surplus to the employed.

It also adds that expansion of domestic tax regime will lead to tax uncertainty for foreign companies with no resource to any credible advance ruling mechanism which will allow them to understand their tax position upfront.

“Removal of exclusion relating to theatrical receipts would certainly put pressure on the finances of the film businesses with a 10 per cent withholding tax rate and increase their compliance burden. The uncertainty attached to film business certainly makes a strong case for a rate much lower than applicable 10 per cent withholding tax rate. Increase in import duties will lead to increased cost for businesses,” it adds.

Key impacts:

·  Withholding tax rate on “fees for technical services” reduced from 10 per cent to 2 per cent, reducing potential litigation on withholding tax rate on content production services and certain other services which do not qualify as “professional services”.

·  Exclusion of consideration from “sale, distribution or exhibition of cinematographic films” removed from “royalty” definition that may make theatrical and other receipts from exploitation of cinematographic films taxable and subject to withholding tax at 10 per cent.

·  Expansion of domestic source rule will bring to tax income of a nonresident from (i) advertisements targeted at a customer located in India

(ii) sale of data collected from a person in India and (iii) sale of goods or services using data of customer located in India.

·  The list of services subject to Equalisation Levy provisions remain unchanged.

·  Exemption provided to non-residents earning royalty and fees for technical services from the requirement of filing a return of income, subject to fulfilment of stated conditions.

·  Relief provided d to the print industry by reduction in customs duty on newsprint and paper.

Latest Reads

MensXP unveils Republic Day Festival

KOLKATA: With the Republic Day around the corner, MensXP has unveiled the Republic Day Festival from 22 January all the way until 26 January 2021. This sale will offer Indian men the opportunity to explore some of the finest Indian brands across winter wear, grooming, innerwear, gadgets, work from...

iWorld Over The Top Services
Disney+Hotstar’s Varun Narang joins Fox Corporation

KOLKATA: Disney+Hotstar chief product officer Varun Narang has moved on to join Fox Corporation in the same role. He will report to chief technology officer and president of digital Paul Cheesbrough, will oversee the company’s portfolio of Fox-branded streaming products, platforms and engineering...

iWorld Over The Top Services
Vidnet 2021: Aggregation of video streaming platforms to pick up soon

The three to four-year-young digital video entertainment industry has shown a massive boom in popularity, gaining prominence quicker than any other medium ever did. The right circumstances backed by the right technological and socio-economical interventions pushed the envelope for this impressive...

iWorld Over The Top Services
Chennai tops entertainment consumption with 73% viewership: Disney+Hotstar

NEW DELHI: The unprecedented rise in the consumption of OTT content, specifically during the lockdown period, has massively contributed to the growth of the sector. Interestingly, most of the platforms have realised and acknowledged a huge spike in content consumption and time spent from the...

iWorld Over The Top Services
Data theft case: CBI files FIR against Cambridge Analytica

KOLKATA: The central bureau of investigation (CBI) has filed an FIR against UK-based political consulting firm Cambridge Analytica for alleged illegal harvesting of personal data in India. It has also booked Global Science Research (GSRL) for its involvement in the same case.

iWorld Over The Top Services
Kerala’s No 1 FM Radio, Club FM, disrupts the radio space and also unveils a new brand identity

Club FM, Kerala’s No. 1 FM station, with the largest coverage, on 18th January, embarked on a new journey; a new brand identity and a new way in which the RJs will be interacting with and engaging the listeners; all with the limitless possibilities on the focus of “U”; the audience who have made...

iWorld Over The Top Services
Vidnet 2021: Fairer margins needed for SVoD to boost ARPUs

The Indian OTT space is booming, more and more platforms are cropping up every day, leaving viewers spoilt for choice. It has also become a crowded and rather skewed market, where out of approximately 70 players, two or three bigwigs take the lion’s share of subscribers and revenue due to their...

iWorld Over The Top Services
Petition in SC against Amazon Prime Video’s Mirzapur

Mumbai: A resident of Mirzapur has moved a PIL in the Supreme Court against the Amazon Prime Video web series Mirzapur, taking exception to the manner in which the eponymous city has been portrayed in the show as a den of terror, crime and other illegal activities. "The said web series has shown...

iWorld Over The Top Services

Sign up for our Newsletter

subscribe for latest stories

* indicates required