New Delhi: In a major releaf to the Cable TV business in the country undert the new Goods and Services Tax (GST) regime, the GST Council has reduced the tax rate for set-top box (STB) from 28 percent to 18 percent.
This positive development will ease working capital management of cable and direct-to-home (DTH) companies besides optimizing their cash flows. The council also reduced the tax rate on coaxial cables and optical fibers to 18 percent from the proposed 28 percent. Altogether, the tax rates of 66 items were reduced.
Earlier, the GST council had fixed the GST rate at 18 percent 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 license fee.
The rate of entertainment tax levied by states on cable TV and DTH is in the range of 10–30 percent. The service tax levied by central government is at 15 percent. DTH companies are required to pay 10 percent of their gross revenue as license fee to the government. As against this, the rate of GST approved by the GST Council on these services is 18 percent.
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 percent 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 percent 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 percent 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.