Broadcasters welcome reduced 18% tax slab on cable TV and DTH services under GST
Broadcasters will now have an out pay of 18 per cent under GST compared to 21 per cent (15 per cent service tax+ 6 per cent VAT) under the earlier taxation system
GST Council’s decision to fix 18 per cent tax rate on cable TV and DTH (Direct-to- Home) services is welcomed by the entire industry. Currently these services attract an entertainment tax in states in the range of 10-30 per cent over and above the service tax levy of 15 per cent. An added bonus from GST rollout would be the increase in tax compliance in cable businesses in the country, which would necessarily lead to higher average revenue per user for the sector as a whole.
Dish TV claims to be the first DTH company to fully migrate to the GST regime in all states and is ready to implement GST when it starts. Jawahar Goel, Managing Director, Dish TV, says “What should be significant in addition to our ability to pass on the uniform tax to subscribers would be the ease of doing day-to-day business and the associated savings in administration, litigation as well as compliance costs that should result from a simpler tax regime. Unlike the current Entertainment Tax and VAT regime, where different rules are used to determine tax in different regions, GST would be a single tax that should be practical and convenient to pass on to the consumer.”
The broadcasters are also upbeat about the tax slab. MK Anand, MD and CEO, Times Network, says, “The entertainment tax that the DTH/Cable operators were paying on the subscription income has been subsumed into GST at 18 per cent which is slightly lower than the existing levy. Hence we see a neutral to marginally positive impact on the subscription revenues.”
But he points out that local bodies need to be subsumed under GST. He cautions, “However if local bodies are not subsumed under GST, they may find ways to levy additional entertainment tax. This may become hugely disadvantageous to the DTH/ Cable networks and in turn will become disadvantageous for the broadcasting industry as well.”
He sees a neutral impact on ad sales. “As far as ad sales is concerned, since we are into B2B business the GST charged by us is fully creditable at the end of our agencies/clients, hence we see neutral impact on ad sales.”
Pawan Jailkhani, Chief Revenue Officer at 9X Media too is upbeat about GST implementation as he says, “For cable TV and DTH it’s a huge tax relief. Eventually they will reinvest that money (that needs to be invested) on content and hardware. With this new tax structure there is a saving of at least 3-5 per cent. So they will have more capex to invest on content and technology or they should pass on the benefits to the consumer. With digitisation in third and fourth phase it will also hasten the process. It will help the consumer as well as the industry. DTH penetration will increase when you have fantastic content, good technology and this will help the content providers and channels and indirectly, the consumer. If you have technology, more content and more TV households, advertisers have to reach that consumer. So eventually it will help advertising sales as well.”
Manav Dhanda, Group CEO, SAB Group - Sri Adhikari Brothers Ltd, points out that GST will provide ease in conducting business as broadcasters will gain a saving on VAT. “GST will witness a lasting impact within various facets of the economy and will also be beneficial in terms of ease of doing business. In the wake of recent developments, TV channel broadcasters stand to gain a saving on VAT, which was a cost to the company earlier and will now be added to the bottom line of the broadcasters. At the end of the day, under GST we, as broadcasters, will now have an out pay of 18 per cent as compared to 21 per cent (15 per cent Service tax+ 6 per cent VAT) under the earlier taxation system. Thus it’s a welcome move for the economy and the industry, which we wholeheartedly support,” he says.
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