Union finance minister, Arun Jaitley, invited various stakeholders for pre-budget consultations in New Delhi on November 26, 2016. The Indian Broadcasting Foundation (IBF) demanded for broadcast and content distribution sectors to be bestowed with infrastructure status to realize the mission of total digitization in the country.
The IBF had discussions with the finance minister and other key officials on key issues related to broadcasting sector – both from policy and tax perspectives.
The broadcasting and content distribution infrastructure like telecom is an important infrastructure for the country. Besides delivering digital television signals, it can be effectively used to deliver broadband services, thereby effectively contributing to the e-governance initiative of the government. Once addressability is introduced by way of digitization, broadcast services are likely to contribute substantial revenue in the form of GST and other taxes to the state exchequer, because of the transparency associated with the digital content distribution services.
On the tax front, key concerns raised were related to extending the benefit of the carry forward of losses in case of amalgamation or merger for broadcasting sector under section 72A as is being extended to telecom, software and ISP services, taxability in the hands of shareholders in case of amalgamation of a foreign company holding shares in Indian company into another foreign company, provision of lowering the outer limit in processing of returns, reduction in MAT rate, resolving the longstanding issue of tax withholding on transponder hire charges treating them as royalty because of retrospective amendment in Income Tax vis--vis DTAA which is causing a huge unnecessary annual burden of USD 20–22 million on broadcasting, DTH, and HITS services.
Television has become an integral part of everyone's life and has attained a status akin to essential services as it is an important tool for dissemination of information and entertainment to masses. Accordingly, broadcasting and distribution services should be subjected to a lower rate under GST regime as is applicable to essential services to make them affordable to masses. Members feel that the government should issue an amendment to the provisions to the Act to specify that similar exemption is available to shareholders as well on a high priority. The purpose of allowing merger of foreign companies would be defeated without extending similar exemption in the hands of shareholders of amalgamating company.