Sony Entertainment Television (SET) and Star TV have managed to wrangle out a deal with advertisers on the 5 per cent service tax issue. While SET has agreed to bear the tax, smaller advertisers have agreed to pay the tax in their agreements with Star TV. According to sources Star India is still negotiating with HLL, Colgate and Pepsi.
Sony has reached an agreement with its big advertisers including Hindustan Lever (HLL) to accept the Indian Society of Advertisers’ recommendation that broadcasters take the hit.
ISA has recommended that advertisers are willing to accept billing requirements which show service tax separately so long as the total cost payable remains with in the agreed rate.
Earlier broadcasters had refused to telecast the commercials after advertisers refused to bear the service tax levied by the government on broadcasters. The broadcasters had pulled out the ads of large advertisers which included HLL, Pepsi, SmithKline Beecham, Nestle and Colgate from September 1.
According to ISA, there was no change in their stand, which is that the service tax cannot be automatically passed to the advertisers. ISA said advertisers are willing to accept billing requirements which show service tax separately so long as the total cost payable remains within the agreed rate.
It is given to understand that biggies including HLL are following ISA’s recommendation.