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Budget'11: Lower licensing fees, duties on STBs – DTH players

25-February-2011
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Budget'11: Lower licensing fees, duties on STBs – DTH players

The direct-to-home (DTH) industry is as keenly awaiting the Finance Minister’s Union Budget 2011 proposals as the rest of the country. While broadcasters have sought rationalisation of Goods and Service Tax, DTH players want lower custom duties on set-top boxes (STB) and reduction in license fee in their Budget wishlist.

What DTH players want
Ajai Puri, Director and CEO, Airtel Digital TV, Bharti airtel, affirmed that DTH had proved that wireless was the way ahead if world class home entertainment was to go mass in India. In an official press note, he said, “DTH is enabling many in India buy their first TV and reaches 30 per cent of the total C&S homes in the country today. Industry estimates put the total number of TV households at around 140 million. 100 million non-TV households, therefore, is an inviting opportunity, but one that is immensely challenging, given that a digital platform like DTH continues to battle several structural anomalies.”

Speaking on production costs, Puri said, “Chipsets constitute bulk of the STB cost, production of which is concentrated in the hands of a select few international vendors. With no indigenous manufacturing being able to measure up to such scale and standard, 95 per cent of the demand for STBs is met via imports. Having borne this tax incidence over the past three years, the industry seeks to be relieved of the custom duty burden of 5 per cent on STBs that have somehow only ended up impeding the digitisation agenda.”

Regarding entertainment tax, Puri stressed that the 10 per cent license fee that was levied only on the DTH platform was “an anomaly that needs urgent rationalisation”. He further said, “While DTH is a Central subject, the industry continues to face entertainment tax, sometimes as high as 25 per cent, from various State governments, a levy that we feel defies any logical reasoning. Should the Goods and Services Tax (GST) subsume this element of the current tax burden, it will help bring in a unified tax structure in the country.”

According to Puri, a tax load of over 35 per cent incidence was too heavy for an industry that “plays such a critical role in fulfilling Government agenda of reaching ‘infotainment’ to the remotest parts of India.”

He pointed out, “Tax levies on the DTH industry include 5 per cent customs duty on STBs, an average of 10 per cent entertainment tax, 10 per cent in license fees and another 10 per cent in service tax. For India to truly experience the magic of the second wireless revolution in the making, a forward movement on these issues will help exploit the DTH industry’s true potential in furthering the Government’s stated objective of digitising India.”
 

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