Union Budget 2018: Broadcasters desire relief in entertainment tax, GST

Union Budget 2017 did not please the media and entertainment industry much. With just a day left for Union Budget 2018, the industry is on their toes this time hoping for a better deal

by exchange4media Staff
Published - Jan 31, 2018 8:57 AM Updated: Jan 31, 2018 8:57 AM

Union Budget 2017 did not please the media and entertainment industry much. With just a day left for Union Budget 2018, the industry is on their toes this time hoping for a better deal.

Though the industry got some benefits through the digital push last year, there was little clarity on FDI policies, GST and other factors that left the industry upset. The Union Budget 2018 is here and the industry is hopeful that this time government will quell the lull and bring some cheer.

Punit Goenka, MD and CEO, ZEEL and president of Indian Broadcasting Foundation, said, "In the rapidly changing landscape, we believe that the distinction between telecom, IT and broadcasting technology has disappeared and that a convergence of these sectors is required. A positive consideration of this demand in the 2018 budget will certainly help in the rapid growth and generation of substantial employment in our country. Also, similar to the telecommunications sector, television broadcasting organisations including Direct-to-Home (DTH) cable services and Headend in the Sky (HITS,) require huge investments in setting up technology and distribution networks and, as such, are 'asset-rich' organisations. Hence, just like in the software and telecom sectors, it's necessary to allow for the carry-forward of losses in the case of amalgamation or merger of companies in the broadcasting sector. For the budget FY18, we are also hopeful that the government will issue a clarification stating that transponder hire charges are not 'royalty' in order to avoid protracted litigation."

Megha Tata, COO, BTVI, mentioned, "With GDP growth rebounding to 6.3 per cent in Q2 of FY 2017-18 and GST jitters receding, I am optimistic about broadcast industry growth in FY 2018-19. However, I would like to see average GST for media and entertainment sector to come down from 18 per cent to pre-GST levels of 15 per cent. It would be great to see corporate tax rate be brought down from 30 per cent to 25 per cent as promised by the Finance Minister in his speech for Union Budget 2015-16."

According to Vikas Khanchandani, CEO Republic TV, the M&E industry will continue on its exponential growth path as we get high speed data connectivity and the corresponding data costs continue to decline. "Data growth has risen on the back of high video consumption on the go and will continue to play a pivotal role for growth in both M&E and Telecom sectors. Keeping in mind the expected growth, one long -pending wish I have from the Budget is the recognition of the M&E industry as an integral part of the Infrastructure sector so that it can avail the various benefits and incentives that are given to the Infrastructure sector. This includes better financing options, to help boost the capital investments needed in digitization and digitalisation, technology upgradation and new technology development and deployment. The net benefit of all of the above will always flow back to the consumer," he expressed.

Meanwhile, Mohan Nair, CEO- Mathrubhumi Television, expects a level playing field in the industry vis-a-vis telecom and IT industry. He felt that if they can be treated as an infrastructure service status, broadcasters and distribution platforms can also be accorded the same. "We also urge the govt to review the applicability of service tax / GST for new broadcasters in the television sector as it would help in meeting up with the huge operational costs, which is uneven to the revenues potential incurred by the news broadcasters," he said.

In the forthcoming budget, the industry expects the abolition of LBT taxes which will limit the tax burden of multiplex owners. "Additionally, there should a systematic mechanism on tax exemptions which were given prior to GST regime as multiplex owners have invested lots of money in it. Besides, the budget should also address the ticket pricing which should be brought under 18 per cent tax regime for betterment of the multiplex industry," said Amit Sharma managing director Miraj Cinemas.

For the accelerated growth of the start-up sector and economy at large, it's important that the push for digitization continue with more vigour. "Initiatives by the government including waving MDR on debit cards on transactions up to Rs. 2,000, really go a long way in attaining this objective and we hope, on similar lines in post-budget period, rationalisation mechanisms are introduced around credit cards rates as well- which will continue to be a major mode of payments. UPI should be made more cost effective and should be given a much larger push to increase its adoption in India," said Mitesh Shah, Head of Finance, BookMyShow.

Shah further said that while the GST council has already taken some proactive measures, we hope the government will re-emphasize on a roadmap for simple and business friendly GST compliance and administration systems. More importantly, over the course of next few months, initiate all necessary constitutional amendments to ensure that there are no other State or Local Body Taxes, as they defeat the very purpose of bringing uniformity in tax structure, while ensuring proper input credit for taxes. We do expect the government to take up and address IT infrastructure and allied issues this year, taking into account some serious issues that are being faced by the entertainment/media sector such as Piracy. The IT laws must be strengthened to address the root cause for these issues that are constantly causing a substantial hit to the overall revenues for the sector."

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