Television channels plans to hike advertising rates by five to 10 per cent to offset the impending levy of five per cent service tax on advertising revenue generated by broadcasters. The service tax levy became applicable from July 16. The hike has been informally decided at the level of the Indian Broadcasting Foundation, the industry''s apex representative body.
According to the industry sources, the levy is 5 per cent, broadcasting companies will have to recover the tax backlog from July.
According to the Central Excise department, so far no demand notices have been issued to the broadcasting companies; but if the default continued, notices would be going out shortly to enforce recovery of the tax.
With the industry generating an annual advertising revenue of around Rs 4,000 crore, the central government expects to tap around Rs 200 crore through this levy.
According to sources, all broadcasting companies are registered as service tax assesses and have to file their tax returns every six months.
Broadcasting, videography and allied industries, which were earlier not covered, were also brought under the service tax net in the previous budget.