DTH operators ask govt to rationalise taxes

Leading DTH players such as Dish TV and TataSky have urged the government to rationalise the multiple taxes on the industry, saying these are affecting the growth of the nascent sector.

"Taxes like service tax, annual license fee and entertainment tax alone take the incidence on services alone to about 50.3 per cent of the total cost. This is bad for the industry, which is still in its nascent stage," TataSky Managing Director and Chief Executive Officer Vikram Kaushik told PTI.

With bottomlines under pressure, operators are charging the consumers extra. Dish TV has hiked the price of set top boxes and its recharge packs in Uttar Pradesh, where entertainment tax to the tune of 30 per cent has been levied by the state government.

"Till now, we were absorbing the additional entertainment tax burden but we have now decided to pass it on to all our new and old customers in the state of UP. At the end of the day, its the customer who gets impacted," Dish TV Chief Operating Officer Salil Kapoor said.

Other DTH players could soon follow suit. Bharti Airtel Chief Executive Officer (DTH) Ajai Puri said, "We are in touch with state governments and sincerely hope that they will correct the situation. However, we are evaluating all options, including charging Entertainment Tax to customers in those states."

There are nearly nine states charging entertainment tax as of now, the highest being in UP and Uttarakhand. "Even Maharashtra and Gujarat have very high tax rates. Bihar too has 25 per cent rate of Entertainment Tax," he said.

The 13-million subscribers industry is growing at a rapid pace with six DTH players -- DishTV, TataSky, SunDirect, DD, Reliance Big TV, and Airtel Digital. Videocon has announced plans to enter this space.

Kaushik estimates that the DTH industry has lost close to Rs 5,000 crore cumulatively till 2009 since its inception in 2004-05.

The DTH companies have to pay service tax, licence fee, excise duty, VAT and entertainment tax, taking the total tax element per user to almost 50 per cent.

Operators are being forced to absorb the increasing tax burden to keep the cost of DTH connections and monthly subscriptions low and drive up sales.

The industry is of the view that the government should give some respite to the DTH industry by rationalising the entertainment tax and other taxes.

"These taxes have a direct impact on the common man. Levying entertainment tax on TV viewing is very archaic as TV viewing in India is a major source of entertainment," Kapoor said.