The entertainment & media sector is one of the fastest growing sectors of our economy and as per the latest Ficci report, this sector is expected to grow at CAGR of 12.5% for the period 2009-13. Bollywood aims to catch up with Hollywood and the increase in the number of TV channels is astounding. Along with rapid strides towards digitalisation and convergence, other sectors like DTH, FM etc are also growing. India is also fast becoming an outsourcing hub for production, post productions and animation effects.
However, the achilles heel for this industry is a plethora of regulations and multiple taxes compounded by uncertainties.
Lets take the case of the broadcasting industry. The downlinking guidelines issued by the ministry of information & broadcasting, stipulate various conditions for permitting foreign telecasting companies to broadcast their channels into Indian homes. Interestingly, there are certain provisions of the policy which seek to dictate the commercial relationship between the foreign telecasting companies and its agents / distributors in India. Removal of such a stipulation could be a welcome step. On the tax front too, the sector is mired in myriad of controversies. There has been extensive litigation on taxation of foreign broadcasting companies in India. It is imperative that certainty is brought into the taxation regime for foreign broadcasting companies, many of whom are presently involved in litigation with the Indian Tax Office.
Even on the customs duty front, clarity is needed. For eg customs duty issue arises when a copy of the content is brought into India for the limited purposes of such certification purposes. The industry has been clamoring for simplification of the procedures and outright exemption for such imports.
The entertainment & media sector is also plagued with multiple taxes. For instance, while there is a service tax levy on sale of advertisement slots, various states also levy VAT on such transactions leading to increased pressure on the profit margins. The industry could do well with single point or rationalised and tax structure. Also, the restriction on availing input tax credit vis-?-vis copyright content under various state legislations could be given a burial.
Trade circles feel that the industry can grow much faster if appropriate relaxations and clarity is forthcoming. The Centre needs to consider the above demands and supporting the Indian media & entertainment industry to reach its rightful position in the global market.
?The writer is executive director, Entertainment & Media tax practice, PricewaterhouseCoopers