An entertainment tax of 25% may be levied on caller ringback tones in the state of Maharashtra, reports PTI, quoting a government executive. Because. It’s. For. Entertainment.
By that logic, just about all music related services from the telecom operators to subscribers – Mobile Radio, Pre-tones, CRBT – would be subject to tax. At present, revenue earned from CRBTs is subject to a 6% license fee paid to the government on the telecom operators annual gross revenue. Additionally – correct me if I’m wrong – but VAS companies pay service tax on CRBT as well. An additional 25% entertainment tax for telecom operators to pay would be end up significantly reducing margins, and hence impact revenue share for all – VAS companies and content owners.
What is perhaps more incredible, is that the same entertainment tax is being considered for Cybercafe’s which are used for surfing the interwebs, ticketing, checking email, gaming…because of the “popularity” of cyber cafes. This, in a country where real estate costs and police harassment are pushing cybercafes out of business.