DTH Industry Wishes More Relief In This Budget

Entertainment Tax, Service Tax, custom duty on Set top boxes and Licensing fees remain the major concern.

BestMediaInfo Bureau | Delhi | February 25, 2011

When Finance Minister Pranab Mukherjee will be presenting the Budget for the fiscal year 2011-2012 on 28^th February, the DTH industry will keep a close eye on what the government has in store for them in the budget. BestMediaInfo.com got hold of wishlist of major DTH players for this year's budget.

An official communiqué from Dishtv says, “The DTH industry is termed as service industry as well as an entertainment industry for the state. So, together it becomes panel taxation with a tax incidence of over 40%. There is a need for rationalization of license fee which stands at 10% of the revenues, to be brought down to 6% at least.

The entertainment tax on watching TV is not justified at all as today television plays a major role in the inclusive growth in the country. If at all it is required, then entertainment tax should be subsumed in GST with its long pending rollout announced and executed in this year's budget.”

The CEO of airtel digital TV Ajai Puri said, "Just like mobile, DTH has shown that wireless is the way to go if world class home entertainment is to go mass in India. DTH is enabling many in India buy their first TV and reaches 30% of the total C&S homes in the country today. Industry estimates put the total number of TV households at around 140 million. 100 million non TV households therefore is an inviting opportunity but one that is immensely challenging, given that a digital platform like DTH continues to battle several structural anomalies.”

“At over 35%, tax incidence is amongst the highest for any industry which plays such a critical role in fulfilling Government agenda of reaching 'infotainment' to the remotest parts of India. The tax levies on the DTH industry include a 5% custom duty on set top boxes (STBs), an average of 10% entertainment tax, 10% in license fees and another 10% in service tax,” adds Puri.

Puri further wishes, “Chipsets constitute the bulk of the STB cost, production of which is concentrated in the hands of a select few international vendors. With no indigenous manufacturing being able to measure to such scale and standard, 95% of the demand for STBs is met via imports. Having borne this tax incidence over the past 3 years, the industry seeks to be relieved of the custom duty burden of 5% on STBs that have somehow only ended up impeding the digitization agenda. While DTH is a Central subject, the industry continues to face entertainment tax sometimes as high as 25% from various State governments, a levy that we feel defies any logical reasoning. Should the Goods and Services Tax (GST) subsume this element of the current tax burden, it will help bring in a unified tax structure in the country.“

“Another tax element for DTH operators is the License Fee of 10% which for some reason is only levied on the DTH platform, an anomaly that needs urgent rationalization.”

“For India to truly experience the magic of the 2^nd wireless revolution in the making, a forward movement on these issues, will help exploit the DTH industry's true potential in furthering the Government's stated objective of digitizing India,” concludes Puri.

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