Budget | Union Budget 2014 announcement: Take note M&E industry

The Union Budget announcement by the newly crowned Finance Minister Arun Jaitley, has ruffled the M&E industry and has put business heads of various media outfits in the ‘thinking’ mode. 

While presenting his maiden budget, Jaitley announced Kisan TV, a television channel dedicated to the interests of the agriculture and allied sector that will be launched in the current financial year. The channel is sought to disseminate real time information to the farmers regarding new farming techniques, water conservation, organic and farming etc.
For this purpose, the Minister has allocated a sum of Rs 100 crore in the General Budget 2014-15.

He also announced ‘Digital India’ programme that will be launched with an aim to bridge the divide between haves and have – nots and will be a new scheme to support 600 new and existing community radio stations. This would ensure Broad band connectivity at village level, improved access to services through IT enabled platforms, greater transparency in Government processes and increased indigenous production of IT hardware and software for exports and improved domestic availability. He also said that special focus would be given on supporting software product start-ups.

The Finance Minister said that the Government has also proposed to set-up ‘National
Rural Internet and Technology Mission’ for services in villages and schools, training in IT skills and E-Kranti for government service delivery and governance scheme with an initial corpus of Rs. 500 crore.

A programme for promoting “Good Governance” will also be launched and a sum of Rs.100 crore will be set aside for this, he added. He went on to inform that so far, around 400 permissions for setting up of a Community Radio Stations have been issued and to encourage further growth in this sector, a new plan scheme has been launched with sum of Rs.100 crore to support 600 new and existing Community Radio Stations.

He stated that Film & Television Institute, Pune and Satyajit Ray Film & Television Institute, Kolkata will be accorded status of Institutes of national importance and a “National Centre for Excellence in Animation, Gaming and Special effects will be set up.

Speaking about Service Tax in the media and advertising industry, Jaitley said that mentioned that online and mobile publishers and advertising networks will now be subject to service tax once again. In his speech he said, “To broaden the tax base in Service Tax, it is necessary to prune the negative list and exemptions to the extent possible. Accordingly, the negative list has been reviewed and service tax leviable currently, on sale of space or time for advertisements in broadcast media, is being extended to cover such sales on other segments like online and mobile advertising. Sale of space for advertisements in print media however would remain excluded from service tax.”

In April 2012, online and mobile advertising has been included in the ‘negative list’ for Service Tax, however, after two years of no service tax being applicable, this scene changes with the new budget announcement. While radio and television advertising was subjected to service tax and print media continues to remain under the negative list, the exit of digital advertising from the list is a concern. Experts expressing concern about this move, state that this will mar the blooming industry which is pegged at Rs 2900 crore (Rs 29 billion) (According to Internet and Mobile Association of India (IAMAI) statistics). They say, Service tax – which is at 12.36%, would negatively impact advertising budgets, since a part of the outlay will be allocated to taxes.