Press Release

'Multiple taxes hindering media & entertainment sector's growth'

18 March 2014

Representatives from the media and entertainment (M&E) sector - television, radio, DTH (Direct To Home) operators and films - on Friday deliberated on taxation issues at Ficci Frames. The key issues - Multiple taxes (VAT + service tax) on a single transaction, high entertainment tax (15-50 per cent across states), ambiguities surrounding withholding tax, etc. The sector is tangled in a host of taxation-related litigation, hindering its growth, feel experts. Many believed tax authorities should be "less aggressive". Nitin Nadkarni, Chief Financial Officer , Multi Screen Media, said, "Singapore tax authorities are quite mature, business-oriented in their approach on taxes and are very accessible. We do not see all these in the Indian tax departments - especially among lower-level tax officials. Indian tax authorities view tax as a revenue source and are not business-oriented." Narayan Prabhat Ranjan, CFO, Viacom 18 Media, said, "The way our authorities interpret taxes is a key factor. The government focus on manufacturing-based taxes should change. There should not be multiple taxes on one transaction, which is the case currently." L Suresh, vice-president, the Film Federation of India (FFI), said, "The Film Federation of India is clamouring with every state to bring down entertainment tax. We have requested the authorities to reduce the amortisation period for losses incurred by movies from 90 days currently to 60 days, given that only seven-eight per cent of films made in India are a hit in any year." The general refrain was implementation of Goods & Services Tax could solve most tax problems of the M&E sector except for entertainment tax. Sambasivan G, CFO, Tata Sky, highlighted the tax issues faced by DTH companies.

WHO SAID WHAT

“Internet amplifies human nature. As a tool, it allows of the five key stakeholders that come under copyright, viz print , film, television, radio and animation and gaming sectors, not a single one was consulted when these amendments were proposed. They were proposed at the behest of certain vested interests, primarily authors of literary and musical works, and certain performers. The amendments have actually created an impasse in the film and television industry, where authors have become trade unions, holding film and television producers and content creators to ransom by demanding exorbitant royalties”

Deepak Jacob   President and General Counsel, STAR India

“The statutory requirement when the government evolves policy is that it will focus on multiple stakeholders is a positive development. Yet, there was bound to be friction between the expanding numbers of stakeholders and levels of dissemination. I think involuntary licensing could provide seamless access to works. It shocks me that the biggest brands in the world are being advertised on the biggest piracy websites”

Ameet Datta   Partner, Saikrishna & Associates

“It is interesting to observe how the student of today has changed. And, the onus to mould the changed learner into a productive workforce is the challenge of education. A multi-tasker, fast thinker with an attention span of less than four minutes, a quick learner who has multiple ways of acquiring information – that is a student of today. It is pertinent, however, whether the Indian education system is geared to face the changes in store. Our country follows the mass-producing factory model”

Meghna Ghai Puri President, Whistling Woods International

"Of every Rs 100 earned by a Direct-To-Home operator, Rs 30-35 go to the Government of India in the form of various taxes. We believe Direct-To-Home is a service industry, and hence, should pay 12.36 per cent service tax. Since DTH does not provide entertainment, it should not be liable to pay entertainment tax. There is also ambiguity about whether Customs duty should be charged on the selling price of set-topboxes or their purchase cost. We think it should be charged on their purchase cost."Asheesh Chatterjee, chief financial officer, Reliance Broadcast Network, highlighted deductibility of one-time licence fee at the start of a channel as a key issue to be addressed.

Source: Business-standard.com

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