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Tag: Budget

  • Budget: Film industry reacts positively

    Budget: Film industry reacts positively

    NEW DELHI/MUMBAI: The film industry has reacted positively to the Budget for 2012-13, describing it as a special gift in 2012 that marks the beginning of the centenary year of Indian cinema.

    The exemption of the film industry from service tax on copyrights relating to recording of cinematographic films is a welcome step that would go on to support the industry that has seen many ups and downs in recent years.

    Said Reliance Entertainment CEO Sanjeev Lamba, “With no service tax now on transfer of copyrights, and entertainment becoming a part of the negative list, this is a huge positive for the industry. There will however be a negative impact due to the general increase in service tax, excise and custom duties. The determination of bringing GST from 12 August sounds quite optimistic. It will bring radical and positive changes in the taxation.”

    The Film Federation of India and film exhibitors have welcomed the announcement in the Budget taking “admission to entertainment or access to amusement services” out of the domain of service tax.

    FFI President Vinod Lamba welcomed the exemption of the film industry from service tax on copyrights relating to recording of cinematographic films.

    Producer Mukesh Bhatt is delighted with the government’s decision to exempt the film industry from service tax. He said, “There couldn’t be such a gift to the film industry that is celebrating its 100th year. With the removal of service tax on copyrights relating to recording of cinematographic films, the Finance Minister has saved us from the repercussion we had to go through passing the service tax burden from the producer to the distributor to the exhibitor. The economics of our business will definitely change.”

    Reacting to the concessions, Bharatiya Janata Party member and prominent film personality Shatrughan Sinha told indiantelevision.com that these concessions had been long overdue and the government had been turning a deaf ear to them until the industry began putting pressure.

    Film and Television Producers Guild CEO Kulmeet Makkar said in a telephonic interview that this was perhaps the first time that the Government had shown that the film industry mattered to it. He said that taking cinema out of the service tax net was a very positive development.

    He said it was also very heartening that incentives had been given to venture capitalists, and this would bring in more people to stake money on good cinema.

    It may be recalled that the Indian film industry had represented that colour, unexposed jumbo rolls of cinematographic film are not manufactured domestically and have to be imported. Heeding to their demands, Finance Minister Pranab Mukherjee proposed to exempt jumbo rolls of 400 feet and 1,000 feet from CVD (countervailing duty) by providing full exemption from excise duty.

    However, the raising of the service tax has grieved a few. Cinemax CEO Sunil Punjabi said, “The impact of service tax moving from 10 to 12 per cent will adversely impact profitability but the positive angle is the implementation of goods and services tax (GST) from this year. That will have a positive impact.”

  • Budget, latest notifications push up STB production, broadcasting costs

     

    NEW DELHI: The measures suggested in the budget proposals for 2007 and the latest government notifications issued on 1 March, will not only make manufacturing of STBs dearer, they will also escalate manifold the price of broadcasting programmes.

    These are the conclusions, an exclusive analysis for indiantelevision.com by a senior tax expert on the matter have thrown up.

    The exemption from CVD has been withdrawn on specified parts of STBs, like tuners, RF Modulators and remote controls, according to Essel Group vice president and MSO Alliance leader Arvind Mohan.

    Mohan handles all the tax issues for the Esssel group.
     

    “Earlier, the exemption on CVD was granted by Notification No.21/2002-Customs. However, this has now been withdrawn vide Notification No.20/2007 March 1, 2007,” Mohan tells indiantelevision.com.

    Accordingly, he argued, now 16 per cent of CVD would be levied on the import of these parts. To that extent, the domestic production of STBs would become costlier.

    “It is quite surprising that though the CVD exemption benefit has been withdrawn from the specified part of STB, the exemption from levy of 4 per cent of Additional Duty of Customs in respect of cell phone parts, components and accessories, as was available only till April 30 2007, has been extended through the present budget proposals till June 30, 2009.

    “It is a clear-cut discrimination between the Telecom Industry and Broadcasting & Cable Industry,” Mohan says.
     

    Mohan shows also that the notification regarding the broadcasting sector would also shoot up their costs dramatically.

    Concessional rate of custom duty at the rate of 5 per cent was levied on the following items used in broadcasting sector vide Notification No.21/2002, on 14 major items. These are

    • Television cameras (with portable field video recorders (professional grade);
    • Audio recording equipment;
    • Tabletop post production video editing machines;
    • Four-source editing controllers to control editing machines;
    • Eight-channel video mixer/switches;
    • Special effect generators for fading and superimposing of text and graphics;
    • Time-base correctors/frame synchronisers;
    • Broadcast standard 3-D computer graphic systems;
    • Professional grade colour video monitors;
    • Portable lighting equipment with lamps for shooting in low light situation;
    • Professional-grade photographic cameras of all formats;
    • Darkroom equipment including enlargers;
    • Computer control editing machines;
    • And spares and accessories of above mentioned equipment as permitted by the Deputy Principal Information Bureau in the Ministry of Information and Broadcasting.

    However, these concession have now been withdrawn vide Notification No.20/2007-Customs. Accordingly, now the basic custom duty at the rate of 10 per cent shall be applicable on all these items,” Mohan says.

    “Consequently all the related duties and taxes would also go up. What you must remember is that professional TV cameras, audio recording equipment, video editing machines, etc. are being regularly used by various channels, specially news channels in their day to day working. This move is likely to adversely affect all channels, including news channels.”

    He points out also that exemption from Customs Duty has been withdrawn on recorded magnetic films used for producing TV serials.

    These items will now attract peak rate of custom duty at the rate of 10 per cent.

    Similarly, the Excise Duty exemption on recorded video cassettes, U-matic tapes, Betacam, any similar format, etc. intended for TV broadcasting, has also been withdrawn and excise duty at the rate of 8 per cent has been imposed.

    “This move is also going to adversely affect the broadcasting sector,” Mohan argues.

    Despite announcements by the government and reiteration by the Telecom Regulatory Authority of India, on the initiative to introduce digitisation in all the major cities of India by 2010 (Commonwealth Games), no fiscal concession has been extended in order to catalyse the process, he asserts.

    “This is clearly contrary to the approach adopted by the government for expanding telecommunication services, which were duly-supported by a lot of fiscal incentives and some of these incentives are still continuing.

    “In order to create a level playing field between IT, newspaper and TV sectors, it is imperative that similar fiscal concessions are extended to broadcasting and cable sector also, to realise the objective of digitisation,” Mohan argued.

    He stresses that while no fiscal concession has been extended for digitization initiative despite the representations and recommendations of Trai and the information & broadcasting ministry, a lot of concessions have been accorded to the delivery of content to cinema in digital form namely, which he felt was also discriminatory action.

    As examples, he shows that digital cinema development projects have been notified as project imports under heading 9801 and will thus attract the project rate of 7.5 per cent customs duty.

    The services provided in relation to delivery of content of cinema in digital form after encrypting electronically have also been exempted from the payment of service tax.

    “Similar concessions are required to be extended for promotion digitisation of broadcasting and the cable sector.

    “World over, there has been a migration from analogue to digital regime as analogue is increasingly becoming obsolete. In all countries, various concessions in the form of subsidies, fiscal incentives, tax holidays for establishment of digital infrastructure are being extended by the respective governments, Mohan says.

    He clearly asserts that creditable role of the government in the process of digitisation, but says that if the targets are to be achieved in the stipulated timeframe at the national level, the necessary support to boost digitisation efforts is required to be extended by the government, as have been done in case of telecom sector.
  • Govt targets 20 million broadband subscribers by 2010

    Govt targets 20 million broadband subscribers by 2010

    NEW DELHI: Even as President A P J Abdul Kalam declared that the year 2007 will be the ‘Year of Broadband’, there are plans to increase to more than two-fold the broadband and internet users in the country over the next three years.

    In his address to the joint sitting of both Houses of Parliament on the opening day of the Budget session, Dr Kalam had said yesterday the government was committed to bridging the digital divide by providing broadband coverage throughout the country. ‘Our information technology sector continues to develop and remain globally competitive’.

    According to the Broadband Policy 2004, there were approximately six million internet and three million broadband subscribers in 2005, and this figure is estimated to rise to 18 million and nine million respectively this year. By the year 2010, India hopes to have 40 million internet and 20 million broadband subscribers.

    Plans are on the anvil to provide broadband services in 400 cities and service providers have plans to reach 1000 cities by the end of 2007. These cities include the 63 cities identified under the National Urban Renewal Mission. The real challenge is to connect the remote villages unconnected so far due to various reasons. One of the viable options for providing connectivity is through wireless mode.

    According to the Sub-Group on ‘Going Digital’ set up by the Planning Commission and headed by Rajeeva Ratna Shah, Member Secretary in the Planning Commission and a former Prasar Bharati CEO, introduction of broadband connectivity opens up new market for providing value added services which can be derived from the digitization.

    The Sub-Group noted that penetration of TV is much higher than PC in the industrialized countries, and provides interactive services including internet on TV and TV on internet. These services can potentially benefit especially the ‘information poor’ and thus reduce the information gap in the society, which is an important implication of the convergence.

    Internet on TV can be provided using Out Of Band (OOB) and In Band (IB) structures. In the IB structure the internet is transmitted alongside with the broadcasting signal. Here the characteristics of the broadcasting infrastructures will have a decisive role on the available services.

    It noted that TV on internet which is also known as WEB TV/Cyber TV will be the future of broadcasting. A precondition for the WEB TV to be able to replace digital TV is the transmission capacity at the end users site increases to such level that it can be possible to provide digital TV services. WEB TV needs to be co-evolved with digital TV and act as complementary for delivery of services.

    The Sub-group has accordingly drawn up a roadmap of digitalization through a a phased approach should be taken for going digital covering all the seven mega cities by 2011 in the first phase and the rest of the country by 2013.

    The Sub-Group comprising seventeen members was set up by the Committee on Information, Communication and Entertainment (ICE) that has been examining the larger issue of convergence and advent of modern technology. Members include the secretaries in Information and Broadcasting and Department of Telecommunications, the Prasar Bharati CEO, the Presidents of CETMA, MAIT, NASSCOM, and ISP Association of India, Co-chairman of the FICCI Entertainment Committee, Chairman of the CII Entertainment Committee, Chairman of the Film & Television Producers Guild of India, President of the Cable TV Operators Association, Mr Rajiv Mehrotra who is the Managing Trustee of the Public Service Broadcasting Trust, Mr Virat Bhatia from AT&T Communications Services, Zee Telefilms President Abhijit Saxena, Mr Sameer Rao who is Vice-President in charge of Strategy, Planning & Regulatory in STAR India, and a representative of the Prime Minister’s Office.

    It was also agreed that a group chaired by Mr B S Lalli, the CEO of Prasar Bharati who is also Chairman of the Indian Broadcasting Foundation, and some private broadcasters like Star, Zee, Sony, Eenadu etc. and their major MSOs will examine an eleven-stage process and firm up their sequencing and put the entire process on a “digital upgrade timeline”.

    The Sub-group has accepted a recommendation for an eleven-stage process for laying down the migration path for migration from analogue transmission to digital domain:

    i. Testing, publication and adoption of technical standard for digital terrestrial transmission.

    ii. Publication and adoption of national standards for digital cable television.

    iii. Prasar Bharati’s roll out of transmission conversion from analogue terrestrial to digital terrestrial both for radio (AIR) and Doordarshan (DD).

    iv. Introduction of addressability and conditional access system in cable and satellite TV environment.

    v. Road map and commencement of indigenous production of STBs containing features such as (a) digital analogue convertors for delivery of digital signal at subscribers’ end and (b) conditional access and addressability features.

    vi. Publication and adoption of national digital television standards for manufacture of digital receivers.

    vii. Commencement of indigenous production of digital receivers.

    viii. Commencement of digital terrestrial broadcast in selected cities by Prasar Bharati staring with Delhi by 2010 and covering all areas by 2013 in four steps.

    ix. Commencement of HDTV broadcast for Commonwealth Games 2010 by Prasar Bharati.

    x. Commencements of digital signal delivery at subscribers end in Cable and Satellite (C & S) homes.

    xi. Nationwide switch off of analogue broadcast both for terrestrial and C & S homes (2015).

  • Zee Turner: Budget should stop double taxation from broadcasters
     

    NEW DELHI: Broadcasters have expressed the hope that the government will ease the taxation structure for the initial three to five years and introduces policies that promote domestic manufacturing of set top boxes because the high import duty and taxes like octroi and other taxes were acting as a bottleneck in smooth transition to digitalisation.

    Zee Turner CEO Arun Poddar told indiantelevision.com today that irrational rates were dissuading Indian entrepreneurs from investing in the production of STBs. He hoped the government would introduce policies that promote domestic manufacturing of STBs.

    Listing his expectations from Union Budget 2007-08 being presented on 28 February, Poddar appealed for doing away with double taxation from broadcasters. He said since media was part of the entertainment as well as a service industry, broadcasters were charged both entertainment tax and service tax.
     

    He said the entertainment industry was in the transition mode from analogue to digital and it was extremely imperative for the government to take steps that not only accelerate the process but also make this industry an interesting and appealing investment proposition for Indian manufacturers.

    Service tax remained one of the crucial and unresolved issues in the entertainment industry and should be sorted out in the forthcoming Union budget. While service tax is levied on the electronic media, the print media is exempted from any such taxation. This is despite the fact that both print and electronic fall under media and entertainment industry. There was therefore need to create a level playing field for all, and take measures to bring electronic at par with print media.
     

    “The 400,000 exemption limit from service tax has led to ‘appalling confusion and dissatisfaction’. While the last mile cable operators are able to take undue advantage of this exemption limit, multi system operators (MSOs) and broadcasters were being penalized,” Poddar said. The last mile cable operators conveniently avoid passing the service tax to MSOs by under declaring their subscriber base by almost 80 to 85 per cent. MSOs and broadcasters paid service tax but could not recover this from the last mile operators.

    He expressed the hope that the government would bring about clarity on how service tax should be charged or should waive the exemption limit completely.