Indian Broadcasting Foundation (IBF), the apex body of broadcasters in the country has asked the government to treat electronic media (television and radio) at par with newspapers with the introduction of Goods and Services Tax (GST). It has urged the government to classify TV under ‘the categorized under the item of mass consumption having a GST rate of 5%.’
This follows an editorial in the Times of India last week which called for a “zero rating of newspapers” and that tax rates should be kept same as or lower than current levels of duty.
GST bill passed in August 2016, exempts newspapers from any indirect taxation. However, mobile and digital advertising was removed from the negative list in the 2014 budget subjecting it to service tax once again, after two years of no service tax being applicable from 2012-14. It was expected to negatively impact advertising budgets, since a part of the outlay will be allocated to taxes. According to IBF’s release, there has been cancellation of advertisements worth over Rs 2000 crores and news channels have also been recently downsizing their human resources. Quoting the Ministry of Information and Broadcasting, the release states that as of December 31, 2016, there are 899 channels in the country out of which 399 are news and current affairs channels and 500 are non-news and current affairs channel.
President of Indian Broadcasting Foundation, Punit Goenka says, ‘Going by the number of TV households, that stands at currently 120 million, we submit to the government that broadcast services i.e. TV & RADIO must be treated at par with the PRINT in the new GST regime. This submission is based entirely on the fact that TV services have become integral part of everyday life to the vast majority in the country and the general economic downturn globally has impacted the sector extensively.’
With the fall in advertising, it appears that television channels are facing further revenue crunch with the air time taken by the mandatory DAVP advertisements. Commenting on the DAVP advertisements,Rohit Gupta, President, Network Sales and International Business, Sony Pictures Networks notes that the DAVP advertisement rates have not been revised since 2010 thereby consuming massive inventories. “The rock-bottom rates are not at all in keeping with the existing market rates and allows little flexibility for maneuverability in carry out businesses and is heavily subsidized by the broadcasters,” he adds.