Give Infrastructure Status to Broadcast & Distribution Sector: IBF to Govt

Finance Minister Arun Jaitley invited various stakeholders for pre-Budget consultations in New Delhi on Saturday, November 26, 2016. Speaking to the media, Punit Goenka, President Indian Broadcasting Foundation (IBF), said, “I am happy to learn that IBF had good discussions with the Finance Minister and other key officials on some of the key issues related to the broadcasting sector – both from policy and tax perspective. Grant of Infrastructure Status for broadcasting and content distribution sector was one of our key demands during the discussions. Once infrastructure status is granted, broadcasters and distribution platforms will be aided with better and affordable financing options in the very capital intensive growth phase to realise the mission of complete digitisation in the country.” 

During the pre-Budget discussions, Girish Srivastava, Secretary General, IBF, said, “The broadcasting and content distribution infrastructure, like telecom, is important infrastructure for the country. Besides delivering digital television signals, it can be effectively used to deliver broadband services and thereby, effectively contributing to the e-Governance initiative of the Government. Once the addressability is introduced by way of digitalisation, broadcast services are likely to contribute substantial revenue in the form of GST and other taxes to the State exchequer because of the transparency associated with the Digital Content Distribution Services.” 

On the tax front, key concerns raised were related to extending the benefit of the carry forward of losses in case of amalgamation or merger for the broadcasting sector under section 72A as is being extended to Telecom, Software and ISP services, taxability in the hands of shareholders in case of amalgamation of a foreign company holding shares in Indian company into another foreign company, provision of lowering the outer limit in processing of returns, reduction in MAT rate, resolving the long standing issue of tax withholding on transponder hire charges treating them as Royalty because of retrospective amendment in Income Tax vis-à-vis DTAA, which is causing a huge unnecessary annual burden of $20 million-$22 million on Broadcasting, DTH & HITS services, etc. 

“Once our key demands raised on tax and regulatory front such as grant of infrastructure status, 72 A benefit, MAT rationalisation, Transponder Royalty, TDS rationalisation, etc., pertaining to both policy and procedural aspects are addressed by the Government, it would be a good example in the direction of ease of doing business in country,” remarked A Mohan, President, Zee Network. 

Mohan further said, “Television has become an integral part of everyone’s life and has attained a status akin to ‘essential services’ as it is an important tool for dissemination of information and entertainment to masses. Accordingly, Broadcasting and Distribution services should be subjected to a lower rate under GST regime as is applicable to essential services, to make them affordable to masses.” 

On the issue of taxability in the hands of shareholders in case of amalgamation of a foreign company holding shares in Indian company into another foreign company, Sanjay Jain, CFO, Star India, mentioned, “The Government should issue an amendment to the provisions to the Act to specify that similar exemption is available to shareholders as well on a high priority. The purpose of allowing merger of foreign companies would be defeated without extending similar exemption in the hands of shareholders of amalgamating company.”