Vaishali Karulkar
moneycontrol.com
Not much was announced for the media and entertainment sector in the Union Budget 2015-16 - only service tax would be levied for entertainment events like concerts, non-recognised sporting event, pagents, music concerts and award functions if the ticket price was more than Rs 500.
However, service by way of admission to exhibition of the cinematographic film, circus, dance, or theatrical performances including drama, ballets or recognized sporting events shall continue to be exempt.
The FM did promise that GST would be put in place by 1st April, 2016.
As the M&E industry that constitutes of 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.
Industry's Expectation from the upcoming Budget
• Under the purview of goods and service tax industry expects uniform, single-point and simplified taxation across various product categories.
• Rationalisation of indirect taxes, which currently range from 30-70 percent would be helpful.
• No tax deduction at source (TDS) on the 15 percent agency commission will reduce the burden of taxes for the broadcasters.
• Solve the double taxation issue: Licensing of copyright content (other than theatrical exhibition) is liable for service tax and value added tax, which results in double taxation on the same transaction. In a recent judicial.
• Entertainment tax be eliminated or at least the rate of tax be moderated.
• Tax Exemptions for Radio Broadcasting
• Reduce customs duty on capital equipment for Radio broadcasting to 4%.
• Export benefits to post production services under service tax legislation.
• 10 Years Tax Holiday for Animation, Gaming, and Visual Effects Industry.
• Above are the industry expectation for robust growth of the industry.
The key beneficiaries of these announcements would be companies like Balaji Telefilms , DB Corp , Dish TV , Eros Int , Hindustan Media , HT Media, INOX Leisure, Jagran Prakashan , NDTV, PVR, Saregama, Shemaroo, Sri Adhikari, Sun TV , TV Today Network , TV18 Broadcast , Zee Entertainment , etc
State of the Industry
Currently the M&E industry is bogged down by myriad of taxes in various forms – both direct and indirect.
Amidst India's evolving economic environment, MSMEs have been advocating revision of the basic structure of definition of MSMEs to provide for a higher capital ceiling.
MSME which contributes about eight per cent of India's GDP plays a vital role in the country's growth. In India there are more than 30 million MSMEs contributing 40 per cent of the country's total export. MSMEs provide employment to more than 60 million people and are producing more than 8000 quality products for the international and Indian market.
Highlights of 2014 Budget
Service Tax:
• 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. Service provided by radio-taxis was brought under service tax.
Some indirect taxes proposals:
• 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.
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