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More taxes spoil the fun

BS Bureau

The finance minister doesn't want the media and entertainment sector to do anything chori-chori, chupke-chupke, and has reduced the customs duty on cinematographic equipment from 25 per cent to 15 per cent. But apparently he has no such expectations from foreign TV channels, who are now to be taxed under the Income Tax Act.

The announcement has made the foreign broadcasters scramble for the fine print.

One of the ambiguities, as pointed out by Star India's chief executive, Peter Mukerjea, is about whether a foreign-based company like Star will pay taxes on its consolidated profit and loss account. "There are certain elements on which clarifications are required and the issues need to be thrashed out. Specially on taxes on repatriation of money," Mukerjea said.

According to industry sources, foreign broadcasters currently pay 48 per cent tax on 10 per cent of their receipts in India, which are deemed as profit as per circular No. 742 issued by the government.

A senior executive of the Indian arm of a foreign broadcasting company asked: "If foreign channels operating in India are to pay tax, then will they pay at the same rate that the Indian companies do or according to different slabs meant for the foreign companies?"

The Indian Broadcasting Foundation --- the apex body representing the broadcasting industry, TV software and airtime selling companies -- was cautious in its reaction, saying that the budgetary announcements were on expected lines. IBF members are meeting on March 3 to discuss the Budget and its full implications.

The broadcasting industry is also anxious over the fact that the budgetary announcement did not differentiate between deemed broadcasters and others. Most companies operating in India, like Sony India, Star India and Discovery India, are not broadcasting companies but agents or marketing and ad sales arms of the parent companies.

The cut in import duty on cameras and equipment for the film industry from 25 per cent to 15 per has been hailed, especially since the film industry imports most of its hardware and all its film stocks.

Admitting it was a positive move, Amit Khanna, chairman of Reliance Entertainment and a veteran film personality, said it was likely to go a long way in bringing down the production cost of a film. However, he pointed out that the levy of 5 per cent service charge on studios and recording facilities negated to an extent the sop the finance minister had offered to the film industry.

The government has increased the grant-in-aid to Prasar Bharati from Rs 9.73 billion to Rs 10.43 billion for the year 2001-02.

But the loans extended to the autonomous body have been reduced to Rs 1.26 billion from Rs 1.39 billion.

The grant-in-aid has been provided to cover the gap in resources of Prasar Bharati for meeting its revenue expenditure.

The government's total budgetary allocation for the I&B ministry has also gone up to Rs 14.72 billion from Rs 13.55 billion.

Source: Business Standard

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