This Friday?s show by finance minister Pranab Mukherjee wasn?t a hit at the box office. The Union Budget has largely come as a dampener for the media & entertainment industry.
The hike in service tax rate to 12% is expected to pinch the entertainment sector, which will probably pass it on to customers in the form of costlier movie tickets, music CDs, music on memory sticks. Also expected is a hike in endorsement fee for celebrities, fees charges by artists, musicians, singers and performing artists among others.
The Budget brings in bad news for foreign players in India, columnists writing in Indian journals, theatre personalities, radio/television artists, musicians, writers and sports commentators. Their gross receipts will now attract tax at the rate the of 20% instead of 10%.
However, exemption has been proposed on permitting the use of copyright in cinematograph films in addition to the currently exempted copyrights in original literary, dramatic, musical or artistic works. However, copyright in sound recording shall continue to be taxable. However, admission to entertainment events or amusement facilities is also proposed to be exempted from service tax.
But to the advantage of public broadcaster Prasar Bharati, the government has increased its investments by 190%. The increased outlay will help Prasar Bharati meet the financial burden of salaries for thousands of employees. Overall, the allocation to Prasar Bharati out of the budgetary allocation for information and broadcasting (I&B) stands at over 85% to R2,328 crore.
The allocation for Prasar Bharati has also gone up 45% to R401 crore while the government’s investments have increased from R276 crore in current fiscal to R801 crore for 2012-13. Overall, the finance ministry has given only a modest 5% hike to the budgetary allocation for the I&B ministry to R2,737 crore.
For the listed cable distributors like DEN Network, Hathway Cable, Dish TV, WWIL and others, the Budget was disappointing as they were awaiting tax breaks that comes with the tag of infrastructure status. This was a long-standing demand of the industry that houses over 60,000 cable operators and two dozen multi-service operators, serving over 100 million-plus cable homes and reaching over 500 million consumers. The proposal for fiscal incentives, including benefits under Section 80 I(A), was evaluated by a committee of secretaries but not approved. Despite that, the cable companies were expecting duty cuts on imported set-top boxes that did not come by.