Foreign broadcasting companies have established Indian companies that conduct the business of selling airtime, contracting out production of programmes, and such like. The income of these companies has always been subject to normal tax provisions. Their principals, the foreign-based channels that do the broadcasting and generate revenues from selling airtime to advertisers, will now also be part of the same tax regime.
Game shows, pioneered by Star Plus’ Kaun Banega Crorepati, have come in for special mention. Earlier, the winners paid as much as 44 per cent on their winnings. Since the personal income tax rate has stabilised at 30 per cent, Sinha has extended this benefit to those who profit from games of chance. This 30 per cent tax will now be deducted at source.
This will not make a difference either way for the channels airing game shows as it is the winner who will bear the burden. However, a lower tax rate will probably increase the enthusiasm of the participants and their supporters.
A tax system based on the real net profit of foreign channels is expected to add to the burden of the big profit-making channels like STAR, Sony and Zee. However, by the same measure, the loss-making ones who were forced to pay 10 per cent of their revenues as ‘deemed profit’ like Discovery Channel or Hallmark will benefit.
For most broadcast groups that have convergence businesses, there is benefit in the provision which allows a five-year tax holiday and 30 per cent deduction for Internet service providers and broadband networks.