Top Story

e4m_logo.png

Home >> Marketing >> Article

What does the passing of the GST bill mean for the media & entertainment industry?

05-August-2016
Font Size   16
What does the passing of the GST bill mean for the media & entertainment industry?

The passing  of the GST has been proclaimed as a historic day for India. But what does the passing of this one bill mean and is it as important as it seems to be?

For one, India Inc. seems to be, on the whole, happy, with the clearance of the GST. The main reason is obviously that it brings the entire country under one, single, uniform, tax policy.

Saloni Roy, Senior Director at Deloitte, is of the opinion that one positive will be that businesses will get more tax credit which was not always possible under the old tax regime. She gives the example of VAT (Value Added Tax), which is in the range of 4-15 per cent.

Speaking about the media and entertainment industry in particular she said, “Service providers like broadcasters, production houses, etc. might have to pay marginally higher (in the GST regime) but the positive is that they will be able to get credit on goods procured.”

However, she also cautioned that under the GST regime it might become a bit difficult for media companies as there might not be any central registration. But this, like many other things with this recently passed bill is still something that is subject to “reading the fine print” said analysts.

Utkarsh Sanghvi, Tax Partner, EY, feels that for the media and entertainment industry, any advantages that the GST would bring would be conditional to how local civic bodies think about entertainment taxes. “We do not know what the local body (civic) will charge (as entertainment tax). We feel most of the municipal corporations might not charge this (extra tax),” he said.

One key issue is obviously that the rate of GST has still to be decided.

Roy felt that it was a decision that would be best made by the appointed body which would have representatives of the states as well as the central government. “This is a very complex issue which depends on current revenues, the expectations from GST, etc. This is something that needs to be decided by the appointed council,” said Roy.

“A rate of around 18 per cent should not be inflationary. Anything above 20 per cent will not be good for the economy,” opined Sanghvi.

Speaking about the tax rate, Rajeev Dimri, Leader (Indirect Tax) BMR & Associates LLP, stated that, “RNR merely ascribes to the tax rate which ensures similar revenue to government under the newly implemented tax regime as collected under the existing structure.  Therefore, the report recommends three category of applicable GST rates i.e. standard rate, lower rate for certain goods and demerit rate.  As per the report, the preferred standard GST rate should fall in the range of 15 to 15.5 percent with a lower rate of 12 per cent on certain goods.  The report also recommends a hefty rate of 40 percent on demerit goods like luxury cars, tobacco, aerated beverages etc.”

 According to analysts we spoke with, the actual decision obviously lies with the appointed council, which will see the state governments have a big say in the matter.

“It is also relevant to take note of the fact that notwithstanding a constitutional assurance for revenue compensation for the first five years, states (which will hold majority membership in GST council) continue to display resistance to an 18 per cent RNR rate. Given the this factual matrix, arriving at a consensus on GST RNR is likely to be an intricate process and must be closely watched by the industry to get more clarity for reviewing their pricing and working capital impact,” opined Dimri.

Tags GST GDP Saloni Roy Deloitte Utkarsh Sanghvi Rajeev Dimri BMR Partners Abhinn Shreshtha

Sidharth Gupta, Co-founder, Treebo talks about their outdoor campaign ‘Perfect stay or don’t pay’, what prompted this bold advertising move, its targeting, and the metrics that the brand utilizes to measure the efficacy of such a campaign

Vijay Mansukhani, speaks to exchange4media about the resurgence of Onida, the scope of growth of consumer electronics market in India and the reasons why Indian consumer electronics brands don’t compete on a global scale

Projjol Banerjea opens up about hiring Anne Macdonald and GroupM's Rob Norman, and the brand's new identity

Meera Iyer tells exchange4media that in FY 2016/17, bigbasket clocked a revenue of Rs 1,400 crore. The online supermarket currently stands at 70,000 orders a day, with operations in 25 cities.

The announcement regarding this was made on Twitter by Sukumar Ranganathan, Editor-in-Chief, Hindustan Times, and Shekhar Gupta, Founder, The Print

The website promises to bring fast, reliable, insight-rich analysis in times when the readers are flooded with ‘breaking news’, and great conversations among an elite community of opinion leaders

The network has based its claim on Broadcast Audience Research Council (BARC) all India data (U+R) from April 2017 to March 2017 (full year average)