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Service Tax Impasse: Broadcasters talk tough. Say 'no compromise'

09-September-2002
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Service Tax Impasse: Broadcasters talk tough. Say 'no compromise'

In an important development, individual broadcasters and their nodal body IBF have decided not to ‘compromise’ on the service issue tax. In a meeting called by IBF and AAAI in Mumbai on Friday 6th September, broadcasters have jointly decided to black out advertising of non-compliant clients. A formal announcement is expected today.

exchange4media has learnt that the IBF and AAAI members, they took a stock of the issue and recognized that it was only a ‘handful’, though large, clients who were still in non-agreement on the issue. This includes HLL and Pepsi. Broadcasters took a ‘no compromise’ stance against them and agreed not to air their commercials.

Representatives of key broadcasters including I Venkat of Eenadu, Raj Nayak of Star Network, Vinod Berry of Sony and G Krishnan of Aaj Tak attended the meeting. Vikram Sakhuja of MindShare Fulcrum, Ashish Bhasin of Initiative Media and Sam Balsara of Madison, amongst others, represented the advertising agencies.

“IBF members are united on the issue of service tax and the absence of certain advertisers is an ample proof,” commented Bhuvan Lal of Indian Broadcasting foundation (IBF).

Earlier, under a call from IBF advertising for many clients, including the number 1 advertiser Hindustan Levers, was pulled off on September 1st, 2002. Later many channels including Sony resumed the telecast of Levers commercials. exchange4media has learnt that it was possible because the Levers-Sony deal specifically included ‘all levies and taxes’. So Sony had no option but to run commercials as per the deal. However, Levers are believed to have provided a letter to Sony and have agreed to show service tax separately in the release instructions.

This development is likely to leave the advertisers in a bit of cold. Market watchers believe that this announcement will put pressure on them and they are expected to trail the line.

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