GST IMPACT ON MEDIA

The Lok Sabha & Rajya Sabha have both approved the introduction of a common Goods & Services tax (GST). The centre has asked the states to set up its machinery to implement the GST.

The government is racing to introduce GST from April 2017.

ITEMS EXEMPTED FROM GST

States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric. The Centre provides excise exemption to processed food and pharmaceuticals and a concessional rate to fruit-based items. Common items between Centre and states include bread, eggs, milk, vegetables, cereals, books and salt, which will continue to be exempted.

Contrary to popular belief, GST will not be applicable on some items, and they will be levied an arbitrary tax. These items include alcohol, cigarettes, petrol & diesel.

Tea, coffee, biscuits and some medicines, currently exempted from excise duty, may come under GST. The finance ministry & state finance ministers are to draw up a common list of exempted items.

"We are finalising the exemption list. Excise exemptions will be pruned to around 90 items," said a government official. "The idea is to keep exemptions to a minimum."

RATE NOT FIXED

There are several unknowns regarding the new GST.

The most important factor is the rate at which GST will be levied. It is speculated that GST will be around 20%, though popular expectation is that GST will be 18%.

In the absence of a specified GST rate, it's far too early to tell if GST will reduce or increase the tax burden in most cases.

The only areas were GST will almost certainly reduce the tax burden, are activities that are currently levied multiple taxes.

CABLE & DTH TO BENEFIT

Harassed by multiple taxes, Cable TV & DTH companies are likely to be major beneficiaries in the Media & Entertainment sector.

MSOs expect to save between 5-10% of tax on their cable TV services when Service Tax and the state-level Entertainment Tax get subsumed under the GST.

Effective import duties may fall. But that will be known only when the final GST rates are declared.

STATE ENTERTAINMENT TAX

The cable TV services are currently levied a service tax of 15% and a widely varying Entertainment Tax.

Cable networks operating in high tax states will benefit while those in low tax areas will have to pay more, under GST.

MSOs in states like Punjab (with up to Rs. 15,000 annual entertainment tax), and Gujarat (Rs. 6 per cable TV sub per month), Haryana (no tax), Kerala (Rs. 5), Orissa (Rs. 3) will see a sharp increase in tax.

Other states like Maharashtra (Rs. 45 per month subscriber), Jharkhand with Rs. 30-50 per month per subscriber, Rs. 20 in Delhi, Bihar Rs. 15 per month per subscriber, will see a reduced tax burden.

DTH

Currently DTH companies charge a single rate countrywide for their packages. they pay different state governments varying taxes, and absorb the differentials. GST will make tax much easier for them, as the same GST rate will be applicable countrywide.

BROADBAND

Currently Broadband is levied a tax based on AGR and a Service tax @ 15%. GST is likely to benefit these companies.

MOVIES & THEATRES

Theatres, multiplexes and film production will be major gainers.

Film exhibition is subjected to punitive entertainment taxes which are imposed at a retail level and are not offset against any taxes charged on procurements. This will change significantly with GST.

The same will hold for film producers and studios.

It is too early to have a definitive picture on the implications of GST. However, the above provides an approximate over view of future taxes.

There should be one tax and one indirect tax department throughout the country

Cuttack, dated 13.09.16- Though the Goods and Service Tax (GST) has many features, implementing it in the present form may not only jeopardise many stakeholders, but lead to inflation.

Addressing a press conference here on Tuesday, All Odisha Association of  Indirect Tax Legal Consultants , General Secretary, Shri C.S. Prusty,  said that the Union government was planning to implement the GST with effect from April 2017.

There were strong indications that the Centre was planning to exempt only 97 products/services from tax. Above all, the taxation slab rates varied, which apparently might result in inflationary trends.

There were also apprehensions among micro and small traders that the Union and State governments might act individually, thus causing confusion among stakeholders. Mr. Prusty  said the State government would not have any control over the rate of taxation or the tax exempted commodities.

Under such circumstances, he said, they had submitted a memorandum to the Centre praying for amendments so that they would provide a level playing field for all concerned. He further  said that under the proposed GST, though there were different types of taxes such as SGST, CGST and IGST, only one department should  collect and control all taxes. After collection the SGST and IGST  portion should be distributed to states.   He stated that all the States VAT departments should merged with CBEC  for collection of  GST. There should be one tax and one indirect tax department throughout the country.He urged the Centre to give due representation to all the associations and trade unions as it concerned all sections in society.

In such a transformation stage, the government should address all these issues and then introduce the GST.

To a query, the office-bearers clarified that they welcomed the GST, but not in the present form.