Most of the past one year, the media industry has been busy resisting the proposed Broadcasting Bill, which it believes could hamper its free functioning.
Want industry status, reduction in FBT NEW DELHI: Most of the past one year, the media industry has been busy resisting the proposed Broadcasting Bill, which it believes could hamper its free functioning.
Nevertheless, the growth in this industry has been phenomenal. On last count, there were as many as 313 television channels beaming into the country. In direct-to-home (DTH) broadcasting, stage has been set for competition between multiple players, as against between only two private operators till now.
With 122 million TV homes, out of which 71 million are cable and satellite connections, broadcasting is a high-opportunity business in India. Plenty of platform choice like direct-to-home, conditional access system and internet protocol television, makes TV broadcasting even more exciting.
Although information and broadcasting (I&B) minister P R Dasmunsi was the one to introduce mandatory-sharing ordinance for sports telecast, that came up for criticism from private channels, he recently pointed out that the potential in the media sector is huge.
Dasmunsi said, “There is a huge potential for development of broadcasting in India and we have a lot of advanced technologies available with us. What we need to have is proper selection of technologies suiting our requirements.”
The minister added, “Over the past few years, the broadcasting sector in India has witnessed all round growth.” However, the finance ministry has been rather quiet on
giving tax relief and any other sops to the media and broadcasting industry. Media companies, both TV channels and DTH players, have once again given a list of their budget expectations, despite disappointment in the previous few years. Stakeholders are hoping that this year would be different.
The Indian Broadcasting Foundation (IBF), that represents the television industry, has told the finance ministry that the broadcasting sector should be included under `Industrial Undertaking’ as defined by the Section 72A of the Income Tax Act, 1961.
The IBF memorandum to the FM points out that “Section 72A of the Income Tax Act, 1961, provides an incentive to robust companies to take over and amalgamate with the companies which would otherwise become a burden on the economy.”
The memorandum states that the basic objective of Section 72A was to revive the financially weak businesses and synergise the business to achieve better growth, better profits, recovery of bad advances by banks and institutions, which will result in higher tax revenues and increase in employment. But, while Section 72A of the Income Tax Act defines the term `Industrial Undertaking’, it does not cover the broadcasting sector.
When the term `Industrial Undertaking’ was introduced, broadcasting industry was in a nascent stage, and therefore the omission, it is believed.
IBF has also demanded that the base for fringe benefit tax (FBT) should be reduced from 20% to 5% for the TV broadcasting industry, as in the case of computer software industry.
Also, customs and excise duties in the entertainment sector should be on par with the IT industry. Currently, custom duty plus countervailing duty and cess on broadcast equipment is 36.64%, against 21.32% for computers and 4% for cellphones, says the IBF note.
In addition, the broadcasting industry wants the countervailing duty and cess charges to be removed on set-top boxes that are a must for the conditional access system (CAS).
While the customs duty on set-top boxes were reduced to zero, CVD, cess and other duties come to 21.32%. IBF has suggested that the government should exempt CVD, cess charges and additional duties on set-top boxes for the next 10 years.
IBF also wants excise exemption for 10 years. A ‘national fund’ for cable infrastructure has also been sought.
An IBF official told DNA Money, “The duties in the broadcasting sector should be on par with the information technology (IT) sector.” “Also there should be no discrimination with the print media vis-à-vis service tax,” he said.
The recommendations of the broadcasting industry include bringing custom and excise duties on broadcasting equipment on par with IT equipment; reducing the custom duty on set-top boxes to zero; exempting broadcasting industry from service tax; and expansion of the definition of `Industrial Undertaking’. The total estimated advertising revenue across television media in 2007 was Rs 7,400 crore.
m_nivedita@dnaindia.net 
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