DTH operators wish for easing of tax burden ahead of Budget

At the forefront are the direct-to-home operators advocating relaxation in multi-layered taxation

As Finance Minister Arun Jaitley and his cabinet prepare to present the Budget on Thursday, the media and entertainment sector is hopeful of some good reforms.

At the fore are direct-to-home (DTH) operators advocating relaxation in multi-layered taxation. Currently, the operators pay 33 per cent of their revenues in taxes to the central and state goernement. This includes 10 per cent in licence fee and 12.36 per cent in service tax to the Centre. At the state level, these pay entertainment tax.

“The entertainment tax in states ranges from zero to 33 per cent (the case in Uttar Pradesh) and on a net basis we pay 11 per cent entertainment tax per year. This brings the total tax outgo to 34 per cent. In the recommendation to the information and broadcasting ministry, we have suggested we should be made to pay taxes to the state or the Centre. Paying to both does not make sense,” said Harit Nagpal, Chief Executive Officer (CEO), Tata Sky.

The operators have invested Rs 25,000 crore in establishing systems and back-end but the tax burden is preventing anyone of six operators from making profits, informs R C Venkateish, CEO, Dish TV India.

The sector is hopeful the Budget will relax the tax burden on the consumer. Siddhartha Roy, chief operating officer, consumer business and allied services, Hungama Digital Media Entertainment, feels only when the consumer has surplus money, will he be able to spend on entertainment.

“As a digital media services company, we are directly impacted by the consumer’s spending capacity, specially on telecom platforms. From our perspective, steps should be taken to strengthen the telecom and broadband infrastructure. Also, alternative payment formats, mainly the mobile wallet mode, should be given a thrust. Ours is a sector where instant consumption and gratification is very important, and enabling the mobile wallet will help deliver this.”

Single-window clearances must be implemented, feels Sudhanshu Vats, chairman, CII national committee on media and entertainment, and group CEO, Viacom18 Media.   

“Taxation and duties need some examining. The multi-layered M&E tax structure deters total contribution of the sector.”

Additionally, queries and licenses need to become more time-bound with status updates available through e-governance initiatives. There is also a pressing need to have clear and consistent policies which would help plan the future at the organizational level. The time, effort and resources spent can then be channeled towards creating more impactful content and marketing it better for wider reach. In return, the industry’s ability to generate direct as well as indirect employment will augment the job-creation agenda of the government.