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Wednesday, 18 March 2015 11:31

No cheers for Broadcast Industry in the Budget

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Every year, broadcasting industry crosses its fingers, waiting eagerly for the government to announce some good news for it in the Budget but like the previous years, Modi Government too has no sympathetic heart for the industry. Although UPA government did not hesitate in passing its responsibility of Digitisation on the private unorganized cable TV industry, creating digital infrastructure to boost the economy, Modi government has also not given a thought to Industry’s plight in its budget proposals for the year 2015-16. 

Although the Finance Minister, Mr Arun Jaitley also handles the I&B Ministry, he does not seems to have any time for the industry. Nothing  much was announced for the media and entertainment sector in the Union Budget 2015-16. 

The FM did promise that GST would be put in place by 1st April, 2016. 

The M&E industry constitutes television, print, radio, social media, and films continues to entertain and inform , plays a critical role in creating awareness on issues affecting and building aspirations for millions of Indians. It also includes smaller segments like radio, music, OOH, animation, gaming and visual effects (VFX) and Internet advertising. The government has also promised ease of doing business and set the ball rolling for FM radio phase III auctions. However, very little is visible in the Budget this year.


Industry's Expectations from the upcoming Budget 

  • Under the purview of goods and service tax (GST) industry expects uniform, single-point and simplified taxation across various product categories and to end multiple taxation.

  • No tax deduction at source (TDS) on the 15 percent agency commission to reduce the burden of taxes on the broadcasters. 

  • Reduce customs duty on capital equipment for Radio broadcasting and cable TV distribution, at par with the telecom industry. 

  • Benefits to STB manufacturers to compete in the international market to cut down on imports.

  • 10 Years Tax Holiday for Animation, Gaming and Visual Effects Industry. 


Disappointments

No relief has been given in the budget as listed above. Instead, service Tax rate has been increased from 12.36% to 14% making the services costlier. Industry will be forced to pass on the increase to the consumers. This will impact the television broadcasting, content and radio companies to that extent.

Smaller advertisers will also be under pressure and ‘hamper advertising spends’.

Double taxation will remain a problem till GST is introduced.

The Budget has prescribed service tax on amusement parks, but none on multiplexes. Service tax would be levied on water parks, theme parks, recreation by means of rides, gaming devices, or bowling alleys in amusement parks, entertainment events such as concerts, pageants, musical performances, award functions, etc. However, multiplexes will continue to be exempted from service tax.

The surcharge on corporate earnings above Rs 10 crore (Rs 100 million) has been increased to 12 per cent from 10 per cent. 


The positives of the Budget  

  • To broaden the tax base in Service Tax, sale of space or time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile advertising. 

  • Sale of space for advertisements in print media however remained excluded from service tax. 

  • Colour picture tubes exempted from basic customs duty to make cathode ray TVs cheaper and more affordable to weaker sections. 

  • To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil. 

  • Gradual reduction of corporate tax from 30 per cent to 25 per cent has been proposed. This has been welcomed by the industry. Its implementation over four-years is a positive development for investments in the Indian M&E sector.

Industry leaders are not happy with the budget as this is the time when industry has been forced by the government to invest heavily in digitization in very unrealistic timelines to help the nation’s economy but the government has has shown no consideration to help the stakeholders or millions of subscribers. 

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