What M&E industry expects from the annual budget?

New Delhi: Finance Minister Nirmala Sitharaman presented the interim budget on February 1 and will present the annual budget on July 23, 2024. The advertising, marketing, and media industries eagerly anticipate the upcoming Union Budget, hoping for measures that will fuel growth, innovation, and digital transformation. 

Key stakeholders are looking for policies that support the burgeoning digital economy, reduce taxation burdens, and enhance consumer spending power, which in turn can boost ad revenues and marketing investments. Additionally, incentives for tech advancements, streamlined regulations, and support for small and medium enterprises (SMEs) within these sectors are high on the wishlist, as these could significantly influence the industry's trajectory and global competitiveness.

Kaushik Das, Founder and CEO of AAO NXT asserted that favourable policy and tax measures for the M&E sector, especially focusing on the rapidly evolving OTT space, in the upcoming budget will be crucial in driving the industry's growth and achieving this vision. 

He added that OTT platforms, in particular, have become a cornerstone of the M&E industry, revolutionising how content is consumed and distributed. The government’s continued support for digital infrastructure is crucial in sustaining this growth. However, the sector faces specific challenges, such as the need for clearer regulations around content and taxation policies that reflect the unique nature of OTT services. Streamlining these regulations would enhance compliance and encourage further investment in the sector.

Das also highlighted that the payments to foreign satellites and data centres are presently classified as royalties or fees for technical services, making them subject to withholding tax. “Clarifying that these payments are not taxable in this manner would greatly assist M&E companies utilising these services,” he said. 

“Moreover, the rules for carrying forward losses during company amalgamations should be expanded to include M&E sector companies, fostering growth and consolidation within the industry,” added Das. 

Das also commented on the challenge involving the TDS (Tax Deducted at Source) system. “Currently, taxpayers face significant difficulties in reconciling TDS with their income due to timing differences. To alleviate this burden, it would be beneficial if the Income-tax Act allowed for TDS credit as reflected in Form 26AS for the corresponding year.

Advertising agencies also face hurdles with the existing TDS framework, which impacts their cash flow due to TDS being applied to the gross billing amount. Lowering the TDS rate on payments from advertisers to these agencies would help ease this financial strain, said Das. 

Yasin Hamidani, Director, of Media Care Brand Solutions said that the advertising and marketing sector in India is anticipating several key measures in the upcoming budget to stimulate growth, foster innovation, and support digital transformation. 

Below are a few pointers he highlighted:

- Providing tax incentives for investments in digital marketing tools and technologies to encourage the adoption of advanced digital strategies.

 - Icreasing funding for local content creators to promote homegrown talent and support the production of high-quality content.

 -Introducing tax relief for companies investing in local content creation to encourage the development of culturally relevant advertising.

-Enhancing support for advertising and marketing startups through incubation programs, funding, and mentorship, fostering innovation in the sector.

- Offering tax incentives for research and development in advertising technologies to promote the creation of new tools and platforms.

-Simplifying regulatory and compliance requirements for advertising agencies to reduce administrative burdens and encourage business growth.

 - Establishing clear data privacy and security guidelines to provide a safe and transparent environment for digital marketing activities.

 - Providing financial and technical support for companies to comply with data protection regulations, ensuring responsible use of consumer data.

- Encouraging collaborations between educational institutions and the advertising industry to develop relevant curricula and internship opportunities.

- Providing incentives for environmentally sustainable advertising practices, such as using eco-friendly materials and reducing carbon footprints.

 - Encouraging companies to integrate corporate social responsibility (CSR) initiatives into their marketing strategies to promote social and environmental causes.

-Supporting advertising agencies to expand globally by providing export incentives and facilitating international partnerships.

He said, “These expectations reflect the industry's desire for a supportive budget that fosters innovation, digital transformation, and sustainable growth, positioning the advertising and marketing sector for future success in a rapidly evolving landscape.”

Striking a similar tone Ambika Sharma, Founder & MD, Pulp Strategy, said, "I anticipate policies that enhance digital infrastructure and incentivise the adoption of advanced technologies like AI, AR, and VR. Additionally, robust support for MSMEs, the backbone of our economy, will be crucial. Measures that provide financial relief and stimulate growth in the MSME sector will inevitably lead to increased marketing and advertising investments, driving overall economic progress. I also hope there will be a focus on providing funds to address delays in MSME payments, which is currently dragging the segment down and creating cash flow challenges."