With just a day to go for the presentation of the Union Budget 2008-09, the radio industry has revealed its wishlist for the Finance Minister. And the industry’s demands echo the general trend of the media and communications industry – reduction in some taxes and duties, and easing the service tax burden. This apart, the radio players also want lowering of customs duty for import of radio equipment.
Tarun Katial, COO, Big FM, expects a reduction in service tax as he feels that the radio industry is still in its infancy and has great employment and media opportunities in the semi-urban and rural markets. “In addition, we need a lowering of income tax rates for the radio industry,” he added.
Katial’s wishlist reads, “An eight-year tax holiday for FM radio operators. Radio broadcasting should be removed from the ambit of service tax, just like the print media. Fringe benefit tax is a non-deductible expense. If a concession in the qualifying rates is provided to radio operators, it would really provide a competitive advantage and a boost to the radio industry. Print media is kept outside the ambit of service tax, the same benefit should be extended to radio as well if we want to establish a level playing field. If not, the local advantage extended by radio as a medium would diminish. Additionally, radio operators are required to pay license fees of 4 per cent of gross revenues, wherein gross revenues include service tax, resulting in double taxation.”
Apurva Purohit, CEO, Radio City, and President, AROI (Association of Radio Operators of India), pointed out in the Union Budget 2007-08, the Government had reduced the customs duty for import of equipment for the radio industry from 40 per cent to 20 per cent. “Given the further expansion of FM stations post Phase III later this year, one expects this to be further reduced. This would particularly help FM stations lower their infrastructure costs and positively impact their margins, especially in Tier II and III cities,” she added.
Agreeing with her, Prashant Panday, CEO, Radio Mirchi, also called for reducing the total burden of imported equipment. “As is well known, nearly all of the Capex of setting up studios and transmission infrastructure is incurred on imported items. The current customs duty, CVD, additional duties and educational cess is too high – total import duties reach nearly 35 per cent. Considering that radio projects in the future would come up in small towns (with population between one lakh and five lakh), the Government should look at totally removing additional duties and education cess, and significantly reducing the CVD on these items,” he added.
Panday further said, “The Government must look at reducing the excise duties on the items made indigenously. The Government must allow loans given by banks to the radio sector (in B, C and D category towns as classified by the I&B Ministry) to be classified as ‘priority sector lending’. This will make it easier for potential broadcasters to access funds when setting up radio stations in these small towns. The Government must extend the backward areas benefits to radio stations launched in B, C and D category towns – giving all advantages to radio broadcasters that are given to other industries. It must also allow the benefits of Section 72(A) to be applied to the media sector as well.”
The calls for reduction in taxes and duties levied may be justifiable for the growth of this industry, but we will have to wait and watch for the Finance Minister’s plans for the industry.
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