IBDF pitches Budget 2026 tax reset; seeks 5% GST on TV, OTT subscriptions

New Delhi: The Indian Broadcasting & Digital Foundation (IBDF) and the Indian Digital Media Industry Foundation (IDMIF) have urged the Centre to use Union Budget 2026–27 to reset the tax framework for India’s media and entertainment sector, warning that high GST incidence, working-capital lock-ups and litigation are squeezing investment capacity.

In submissions to the Ministry of Finance on direct taxes and GST, the bodies have pressed for a predictable, growth-oriented regime that cuts disputes, eases compliance and frees cash for reinvestment.

IBDF and IDMIF argue that linear TV is operating under pressure from rising costs, cash-flow constraints and shifts in advertising. Digital media, they say, needs clearer rules as supply chains become more layered and platform models evolve, with ambiguity triggering disputes.

Avinash Pandey, Secretary General, IBDF, said: “At the heart of IBDF-IDMIF budget submission is a simple principle: affordability drives accessibility. When the cost of a television or digital subscription is reduced, its power to inform, educate, and unify the nation is multiplied.

“A rationalisation of the GST structure is not just a fiscal correction; it is an investment in a more connected and digitally inclusive India. It will put money back into the hands of consumers, stimulate the creative economy, and ensure that the primary screens of modern India are within reach of every household, thus truly powering the vision of a self-reliant and digitally empowered society.”

A central GST demand is a cut in subscription taxes. The bodies have urged the government to reduce GST on TV and digital subscriptions to 5 per cent from 18 per cent, arguing that the current rate hurts affordability and adoption and creates uneven treatment across platforms. They have also called for parity so similar services are not taxed differently merely because of the medium.

Alongside a rate cut, IBDF and IDMIF have sought fixes for the inverted duty structure and stranded credit risk. They have asked that refunds be allowed on input tax credit from input services if output GST is reduced, or that GST on key inputs such as content and sports rights be rationalised, so relief does not translate into deeper liquidity stress.

Seeking working-capital relief, the bodies have urged that GST liability on services supplied to government entities be linked to actual receipt of payment, arguing that delayed payments force businesses to fund tax upfront.

They have also sought permission to use input tax credit to discharge Reverse Charge Mechanism liabilities, saying the restriction increases cash outflows despite credits being available. Separately, they have sought a legal provision to allow GST under reverse charge for import of services to be paid through utilisation of input tax credit, arguing this would reduce unwanted blockage of credit and working capital.

To reduce compliance drag for pan-India operators, IBDF and IDMIF have proposed an LTU-like mechanism under GST for large taxpayers to consolidate scrutiny, reduce multi-state audits and bring consistency to notices.

They have also flagged GSTN process issues that can complicate restructurings, including state-based validations for Form ITC-02 that affect input credit transfer during mergers and reorganisations.

For digital business models, the bodies have urged clarificatory circulars for complex digital advertising supply chains involving multiple intermediaries, where valuation and taxability questions can trigger disputes.

They have also cautioned against extending B2C e-invoicing to OTT subscription transactions, arguing that high volumes of low-value consumer payments would raise compliance costs. They have additionally sought clarity on local body entertainment tax to prevent overlaps or dual levies as consumption shifts across platforms.

On direct taxes, IBDF and IDMIF have pushed for reforms that support consolidation, reduce cross-border disputes and improve liquidity.

A key structural ask is an amendment to Section 72A of the Income Tax Act to explicitly permit carry-forward of losses for the media and entertainment sector in mergers and amalgamations, bringing parity with other service industries.

They have also reiterated a litigation area around withholding tax on transponder hire charges, urging alignment of the domestic definition of “royalty” with India’s tax treaties to resolve disputes and reduce cost escalation for broadcasters operating on “net of tax” contracts.

Procedural barriers for non-residents also feature, with the bodies seeking simplification of mandatory e-filing of Form 10F, citing registration and OTP issues that can block genuine taxpayers.

Liquidity measures include a timeline-driven mechanism for processing income-tax refunds and issuing lower withholding tax (Form 13) orders, and flexibility to modify parties under existing lower-TDS certificates without losing validity.

IBDF and IDMIF have framed Budget 2026–27 as a test of whether the tax system will back sector reinvestment. They have urged the government to pair affordability-led GST reform with faster refunds and dispute reduction, arguing that without certainty and cash-flow relief, the sector’s ability to fund content and technology upgrades will remain constrained.