For the entertainment industry, it is a mix of ‘Kuch Khatte Kuch Meethi”. Finance minister proposal of reduction of customs duty on uplinking and TV studio equipment from 35 per cent to 25 per cent has brought cheer; the tax exemption for multiplexes in non-metro cities has also made the industry happy. But the bad news is for the cable operators and the broadcasters who will have to continue to live with the five per cent service tax in 2002-03.
Finance Minister announced a 22 per cent increase in the budgetary support for the information and broadcasting ministry. This will take the I&B ministry’s allocation up to Rs 415 crore for 2002-03. Stressing on the need for a fiscal regime, the minister said banks and financial institutions have already sanctioned Rs 236 crore for film and TV software production.
The Finance Minister also announced that up to 50 per cent of the multiplexes’ profit to be exempted from tax in the non-metros for the next five years.
Peter Mukherjea , CEO Star India, expressing his mixed reaction about budget, said that “The Finance Ministers speech, about the importance of the Entertainment sector and making India the international hub for all types of entertainment inputs is very encouraging. However, his decision to extend service tax to cable operators, instead of deferring the service tax as requested is a set back to the industry.”
He also welcomed the rationalised the Customs and Excise duties on equipment which is not indigenously available.
The reduction in customs duty for uplinking equipment will bring down the operational costs, but industry representatives are yet to know the exact impact as it was not clear on whether it covered conditional access system and downlink equipment. If these equipments fall within the ambit, estimates are that the cost of operations will fall by 15-20 per cent per year.