New Delhi: Industry bodies Indian Broadcasting & Digital Foundation (IBDF) and Indian Digital Media Industry Foundation (IDMIF) have called on the Centre to use Union Budget 2026–27 to recalibrate the tax framework for India’s media and entertainment sector, warning that a high GST incidence, working-capital lock-ups and prolonged litigation are constraining investment and growth.
In submissions to the Ministry of Finance on direct taxes and GST, the associations pressed for a predictable, growth-oriented regime that reduces disputes, eases compliance and releases cash for reinvestment. They argued that linear television is under pressure from rising costs, cash-flow constraints and shifting advertising patterns, while digital media needs clearer tax rules as supply chains become more layered and platform models evolve.
“Television and online curated content services have become essential, mass-access platforms for millions of Indian households,” said Kevin Vaz, President – IBDF & IDMIF and CEO – Entertainment at JioStar. He said a contemporary tax framework that recognises the public value and scale of these services would help the sector navigate structural change. Vaz added that rationalising GST could make subscriptions more affordable, boost adoption and support national priorities such as Digital India, ease of doing business and inclusive growth.
Avinash Pandey, Secretary General, IBDF, said affordability is central to accessibility. “A rationalisation of the GST structure is not just a fiscal correction; it is an investment in a more connected and digitally inclusive India,” he said, adding that lower costs would stimulate the creative economy and put money back into consumers’ hands.
GST reforms at the core
A central demand is a sharp cut in subscription taxes. IBDF and IDMIF have urged the government to reduce GST on TV and digital subscriptions to 5% from 18%, arguing that the current rate hurts affordability and adoption and creates uneven treatment across platforms. They have also sought parity so similar services are not taxed differently merely because of the delivery medium.
Alongside a rate cut, the bodies have flagged the risk of an inverted duty structure and stranded input tax credits. They want refunds to be allowed on input tax credit from services if output GST is reduced, or a rationalisation of GST on key inputs such as content and sports rights so that relief does not translate into deeper liquidity stress.
For working-capital relief, the submissions seek that GST liability on services supplied to government entities be linked to actual receipt of payment, citing delayed payments that force businesses to fund tax upfront. They have also asked for permission to use input tax credit to discharge Reverse Charge Mechanism liabilities, including GST under reverse charge for import of services, to prevent cash blockages despite credits being available.
To reduce compliance drag for pan-India operators, IBDF and IDMIF have proposed an LTU-like mechanism under GST for large taxpayers to consolidate scrutiny, curb multi-state audits and ensure consistency in notices. They also flagged GSTN process issues that complicate restructurings, including state-based validations for Form ITC-02 during mergers and reorganisations.
Digital clarity, direct tax relief
For digital business models, the bodies have sought clarificatory circulars on complex digital advertising supply chains involving multiple intermediaries, where valuation and taxability disputes are common. They have cautioned against extending B2C e-invoicing to OTT subscriptions, arguing that high volumes of low-value consumer transactions would raise compliance costs, and asked for clarity on local body entertainment taxes to avoid dual levies.
On direct taxes, IBDF and IDMIF have pushed for reforms to support consolidation, reduce cross-border disputes and improve liquidity. A key structural ask is amending Section 72A of the Income Tax Act to explicitly permit carry-forward of losses for the media and entertainment sector in mergers and amalgamations, bringing parity with other service industries.
They have also reiterated concerns around withholding tax on transponder hire charges, seeking alignment of the domestic definition of “royalty” with India’s tax treaties to resolve disputes. Procedural issues for non-residents, including mandatory e-filing of Form 10F, and liquidity measures such as time-bound processing of refunds and lower-TDS orders, also feature in the submissions.
Framing Budget 2026–27 as a test of policy intent, IBDF and IDMIF said pairing affordability-led GST reform with faster refunds and dispute reduction is critical. Without certainty and cash-flow relief, they warned, the sector’s ability to fund content creation and technology upgrades will remain constrained.
