UP sets tax slabs for cable operators

In a major pre-election benefit to cable operators, the UP government has made a proposal for compounding the entertainment tax charged from them. Now, the tax from the cable operators is charged on the basis of the number of connections.

In the new proposal, moved by the entertainment tax department, the tax will now be charged on the basis of slabs. The number of slabs is proposed to be kept at ten.

The first slab will be for 100 connections, the second for 100-200, the third for 200-350, and the fourth for 350-500. The cable operators with 5,000 or more connections will be covered under higher slabs.

The compounding of the entertainment tax on cable operators is proposed to be implemented on a trial basis from the present fiscal.

According to entertainment tax department sources, the compounding of the tax structure, besides eliminating corruption, will end the dispute between the department and the operators on the number of connections given by each operator.

Ever since the state government brought the cable business in the tax net over 10 years ago, both the parties were at daggers drawn over the number of connections. The cable operators were reluctant to reveal the number of the connections, fearing higher tax liability, even as the government imposed the tax on the basis of the number of connections.

"We are flooded with complaints from cable operators from districts that they were being harassed by district entertainment tax officers, who threatened to conduct surveys or carry out a fresh census for ascertaining the number of connections given by each cable operator in the district," said a senior official of the department, adding that the "slab system would end the scope for dispute between the department and the operators."

The finance department has, however, thrown a spanner in the works by asking for an assurance from the entertainment tax department that there would be no drop in total annual revenue collection.

The state government in 2005-06 collected Rs 24 crore from the cable operators as entertainment tax.

The UP Cable Operators' Association has welcomed the move, saying it would end the uncertainty in the business.

A prominent operator in Lucknow, Vinod Telang, said: "With the compounding of the tax, the government will earn more revenue at much less collection cost because there will be little or no scope of litigation."