Television channels are better taxpayers, says finmin

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Notorious for irritating frequent and long commercial breaks, the television channels are good taxpayers giving to the exchequer more than one-third of their pre-tax profits, much higher than the industry average of about 20%.

The television channels have paid 36.37 % of their profit as tax compared to the industry average of 20.60 %, said finance ministry’s data of the corporate tax paid by 3.28 lakh companies during 2006-07.

The data pointed out that during the year, 167 television channels on a profit of Rs 788.9 crore paid Rs 286.9 crore as tax to the government. The 36.37 % tax paid by television channels was only next to forest contractors, security agencies and courier services, which paid 39.33 %, 37.80 % and 37.64 % respectively, of their profits as tax to the exchequer.

Among others who paid more than 30 % of their profit as taxes were chit funds, fashion designers, advertisement agencies and tobacco companies. According to the finance ministry’s analysis the corporates paid 20.60 of their profits as taxes as against the prescribed rate of 30% excluding surcharge and education cess.

The companies take advantage of various tax exemption schemes to reduce their tax liability. The revenue foregone towards corporation tax during 2006-07 was Rs 45,034 crore, which is estimated to increase to Rs 58,655 crore during the current financial year.

Among the industries, which enjoyed very benign incidence of taxes, were agro-based companies, software firms and tyre companies.

The incidence of tax was only 2.46 % in case of agro-based companies during 2006-07. According to the Budget documents, 10,691 agro-based companies collectively paid Rs 2,147.8 crore as tax on a profit of Rs 9,562.6 crore. Software development agencies benefited immensely from the tax regime as they paid 6.38 % of their Rs 16,006 crore profit as tax to the exchequer.

The incidence of tax on IT-enabled services and BPO service providers worked out to be only marginally more at 7.36 %. According to the finance ministry figures, 5,525

BPOs paid a tax of Rs 1,352.9 crore on a profit of Rs 18,391.3 crore. Tyre companies too enjoyed a very favourable tax structure having paid only 11.22 % of their profit as tax. Among the professionals, lawyers paid the least amount of taxes. The finance ministry data showed 176 legal professionals on a profit of Rs 28.4 % paid only Rs 4.7 crore as tax, which worked out to be 16.42 %.