Broadcasters seek service tax exemption on ads

Broadcasters seek service tax exemption on ads

Author | exchange4media News Service | Friday, Jun 18,2004 8:06 AM

Broadcasters seek service tax exemption on ads

The Indian Broadcasting Foundation (IBF) has asked the Finance Ministry to exempt the broadcasting industry from service tax and bring on a par with the print media.

In a pre-Budget Memorandum submitted to the Finance Ministry, the IBF said that an advertisement in the electronic media is subject to service tax whereas the same advertisement on the print media is exempted from the service tax.

"There is no justification for such discrimination between the print and electronic media. The reach of electronic media is greater than any other media and having greater role in information, education, and entertainment to the general public," the apex body said.

However, if a rollback on service tax on the broadcasting sector is not possible the IBF has suggested the service tax may be charged on 25 per cent of the advertising revenue since on an average 75 per cent of the cost is for content creation and not for generating the revenue from the advertisements.

In order to ensure a widespread rollout of the conditional access system and direct-to-home (DTH) services, the IBF has sought exemption of customs duty on set-top boxes (STBs) for at least another three years to ensure that customers get STBs at reasonable prices. In order to encourage indigenous production of STBs, it has sought an exemption of excise duty on STBs.

The foreign broadcasting companies are mainly marketing agents called Foreign Telecasting Companies. However, the sector does not have a fixed Tax deducted at source (TDS) rate. The FTCs have to apply to the Income Tax Accessing Officers every year to obtain a TDS rate on airtime sales. The IBF has said, "Like other services, professionals and contractors, a prescribed TDS rate for airtime sales at a maximum rate of 5 per cent should be fixed. These companies in any case have to pay the advance tax as per the profitability as is applicable in the case of other companies."

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