Digital drive to put R2k cr in govt kitty annually

Written by Ashish Sinha | New Delhi | Updated: Feb 28 2012, 08:57am hrs
For the government, which is reeling under the pressure of a widening revenue deficit, the impending conversion of nearly 70 million analogue cable homes to digital addressable system (DAS) will lead to annual gains of R1,900 crore from service tax and income tax alone. Clubbed with the realisations from customs duty, entertainment tax and others, digitisation may lead to collection of up to R2,500 crore annually from FY13.

Currently, the government loses around R1,600 crore annually due to the analogue cable system networks because of leakages in the subscription revenue and non-realisation of various taxes on under-declaration.

The internal note prepared for the finance ministry states that the annual service tax realised from the cable industry stands at only around R55 crore, whereas the actual collections should be around R660 crore. Similarly, the current income tax collections from the cable companies stand at a little under R200 crore annually, whereas it should be around R1,200 crore. Together, the tax loss to the exchequer stands at R1,600 crore per annum. But this will change after DAS rollout.

As a result, the information and broadcasting (I&B) ministry has already made it clear that there will be no relaxation in the laid down schedule of the four-phase implementation of DAS. The first phase covers all four metros where DAS will be rolled out from July 1. In phase-II, all towns with population of over one million will get DAS from April 1, 2013, while rest of the country should get DAS by 2014 end.

Under DAS, all consumers of cable and satellite channels will need a digital addressable set-top box (STB). No consumer will be able to access television channels without an STB. Also, the transmission of analogue cable channels will become illegal and a punishable offence under the provisions of the amended cable laws that have already got Parliament nod.

According to governments estimates the cable services, which are mainly distributed on analogue technology (copper wire), have a limited carrying capacity of around 70 channels, which restricts the choice for the consumers. This is because today there are around 800 channels available in the country and popular digital platforms like DTH offer an average of 300 channels to their consumers.

The deficiencies in the analogue cable are numerous. It leads to lack of transparency in the subscribers numbers which in turn leads to under-declaration of subscription revenue and concealment of tax revenue. This leads to excessive dependence of advertisement revenue for broadcasters, which in turn leads to unhealthy race for TRP ratings, said a senior government official.

DAS will give consumers superior picture quality, availability of choice and value-added services, including video-on-demand, triple play, and broadband among others. For the government, it will mean transparent tax realisation.

But with constant tiff between the cable operators (about 60,000 in numbers) and a dozen large cable distribution firms is worrying the government. All efforts are being taken to stick to the June 30 deadline for the roll out of DAS in the metros. The government is very serious, a senior government official handling the work said.