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GST Council lowers tax rate on STBs to 18%

MUMBAI: In a breather to the TV distribution platforms, the Goods and Services Tax (GST) Council reduced the tax rate for set-top box (STB) to 18% from the proposed rate of 28%.

The move is expected to ease working capital management of cable and direct-to-hone (DTH) companies besides optimising their cash flows.

The council also reduced the tax rate on coaxial cables and optical fibres to 18% from the proposed 28%. Altogether, the tax rates of 66 items were reduced.

Earlier, the GST council had fixed the GST rate at 18% for cable TV and DTH services. Currently, cable and DTH companies have to pay multiple taxes like service and entertainment tax. DTH companies have an additional burden in the form of licence fee.

The rate of entertainment tax levied by states on cable TV and DTH is in the range of 10–30%. The service tax levied by central government is at 15%. DTH companies are required to pay 10% of their gross revenue as licence fee to the government. As against this, the rate of GST approved by the GST Council on these services is 18%.

Furthermore, service providers will be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services.

Taxes on entertainment and amusement services covered by the erstwhile entry no. 62 of the State List of the Constitution have been subsumed under GST, except to the extent of taxes on entertainment and amusement levied by a panchayat or a municipality.

The GST Council has fixed 28% GST rate on cinema theatres. Justifying the move, the finance ministry said that the entertainment tax rates on theatres/cinema halls is as high as 100% in some of the states.

The rate of GST approved by the GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18% ad valorem. Further, the GST Council has approved an exemption up to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the states.

In addition to the benefit of lower headline rates of GST, the service providers will be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services.