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Broadcasting sector feels tax reliefs will boost DTH, digital cable
NEW DELHI: Information and Broadcasting Minister Ambika Soni has urged Finance Minister Pranab Mukherjee Mukherjee to bring down the special additional duty (SAD) and countervailing duty (CVD) on digital set-top boxes to zero per cent for at least five years. The current SAD and CVD on set-top boxes are 4 per cent and 8 per cent respectively.

There will be a nearly seven-fold increase in the number of DTH and digital cable subscribers, to around 82 million by 2013-14 and a net revenue of around Rs 72 billion, if the current duty regime is brought to zero for five years, the Ministry estimates.

In the last two years, DTH and digital cable sector grew from around four million subscribers to 12.5 million subscribers, and the figure is expected to cross the 80 million mark within the next five years if the duty regime is ended, according to estimates presented at Ficci Frames.

According to the calculations made by industry experts, the reduction in CVD and SAD on boxes may result in a one-time revenue loss of Rs 210 per box but the recurring revenue benefit will be Rs 622 per year per STB to the government – amounting to a recurring revenue of Rs 17.30 billion per year, with additional penetration of the boxes in DTH and digital cable services.

Some stakeholders told that the sector wants broadcasting to be categorized as an infrastructure service so that the benefits and incentives applicable for the infrastructure sector could be extended to it.

Noting that the Government is introducing Goods and Service Tax (GST) regime from April 2010, it has also been suggested that the service tax, entertainment tax and VAT should be subsumed in GST and only a single/unified GST rate be notified for direct-to-home (DTH), FM Radio operators, cable services, and for similar content distribution services.

Soni recently said she had sought reduction in the fringe benefit tax (FBT) from 20 per cent to 5 per cent for media personnel working for both print and electronic media companies.

"Keeping in mind the fact that the broadcasting sector is expected to grow at the rate of 12% in the next four years, I requested the Finance Minister to provide parity and rationalisation in the service tax paid by broadcasters on revenues accrued by them from advertisements,'' Soni said after a meeting with Mukherjee.

Sources said that the broadcasting sector is also seeking relief in Fringe Benefit Tax in the matter of booking of hotels, travel and food even when traveling for professional work. The sector wants a reduction in FBT for media personnel from 20 per cent to 5 per cent.

The basic custom duty for digital head-end equipments should be brought to zero per cent. This presently varies from 7.5 to 10 per cent.

The sector wants tax holiday for five years under Section 80 – 1A of the Income Tax Act for those sub-sectors who are undertaking digitalization and tax at not more than 30 per cent for a further five assessment years in a block of 15 years.

Broadcasting entities want exemption from payment of service tax on revenue accruing from advertisements shown on electronic media, at par with the print media.

A Ficci spokesperson told that it was seeking that the gaming, animation and the VFX (visual effects) industries be given a ten-year tax holiday as they were emerging sectors. This should also be extended to children’s films.

Ficci also feels that there is need to encourage local talent by providing a mandatory provision on the networks to screen ten per cent of local programming to begin with, ultimately taking this to 30 per cent. This was because most of the animation and gaming at present was being imported despite local talent being available.

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