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IBF bats for infrastructure status for broadcast, content distribution sector

MUMBAI: At a pre-Budget consultation meet with Finance Minister Arun Jaitley in New Delhi on 26 November, stakeholders argued for granting infrastructure status to the broadcasting and content distribution sector.

Punit GoenkaSpeaking to the media, Indian Broadcasting Foundation (IBF) president Punit Goenka said, “I am happy to learn that the 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”.

IBF secretary general Girish Srivastava 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 addressability is introduced through digitisation, 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 longstanding 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 US $20–22 million on broadcasting, DTH and HITS services, etc.

“Once our key demands raised on tax and regulatory front such as grant of infrastructure status, 72A 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.

“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 the masses,” said Zee Network president A Mohan.

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, Star India CFO Sanjay Jain 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.”