IBF demands ‘Infrastructure Status’ for the Broadcast and Content Distribution Sector in Pre-Budget Consultation with Finance Minister

New Delhi: Finance Minister Arun Jaitley invited various stakeholders for pre-Budget consultations in New Delhi on Saturday 26th November. Speaking to the media Mr. 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 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 digitization in Country”.

During the pre-Budget discussions, Mr. Girish Srivastava, Secretary General, IBF said that, “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 digitalization, 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 tax front, key concerns raised were related to extending the benefit of  the carry forward of losses in case of amalgamation or merger for 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   US $ 20- $ 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 rationalization, Transponder Royalty, TDS rationalization 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” – said Mr. A Mohan, President ZEE Network.

Mr. Mohan added further: “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, Mr. Sanjay Jain, CFO Star India mentioned that, “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.”