Broadcasting and TV software companies operating in India have decided to take up the contentious issue of 5 per cent service tax on broadcasting services with the government.
A representation to the government is likely to be made over the next couple of weeks in this regard, which will broadly state that the imposition of 5 per cent service tax should be deferred, if not abolished, till the economy picks up, according to industry sources.
Piloted by the Indian Broadcasting Foundation (IBF), the move has been prompted by the reluctance on the part of the advertising agencies to pay broadcasters an additional service tax as advertising industry is not covered under the service tax rules, notified by the government last month.
The taxable service, according to the government, is any broadcasting service provided to a client by a broadcasting agency or organization.
Broadcasters contend that the recipient of the service (advertising agencies apart from others) should also shoulder the additional tax burden.
A meeting attended by senior representatives from Star India, Sony Entertainment TV India, Zee Telefilms and advertising industry among others, was held yesterday in Mumbai. Though advertising agencies are a bit reticent, IBF has decided to join hands with Advertising Agencies Association of India (AAAI) and Indian Society of Advertisers (ISA).
In a circular issued last month, the government had listed 15 new services on which service tax was to be levied with effect from July 16, 2001. The circular, however, clarifies that uplinking agencies like VSNL and cable operators are not liable to be taxed under the new provision.
But multiple system operators like Siti Cable, InCablenet and broadband players like Spectranet, operating cable-delivered channels and airing ads and programmes, would be liable to pay service tax on the amount charged for the service.