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MUMBAI:
Given that the radio industry is still at its infancy and
has great employment and media opportunities in the semi-urban
and rural markets, the FM operators are expecting a reduction
in service tax in the forthcoming Budget 2008.
Since
fringe benefit tax is a non-deductible expense, FM industry
is looking for a concession in the qualifying rates to radio
operators. They feel that would provide a competitive advantage
and a boost to the radio Industry. Besides, they are looking
for an eight-year tax holiday to FM radio operators.
Big
FM COO Tarun Katial said, “Radio broadcasting should
be removed from the ambit of service tax, just like print
media. Print media is kept outside the ambit of service tax
and the same benefit should be extended to radio as well,
if we want to establish a level-playing field. If not, the
local advantage extended by radio as a medium will diminish.
Additionally, radio operators are required to pay licence
fees on 4 per cent of gross revenues wherein, gross revenues
include service tax, resulting in double taxation.”
The
FM industry is stressing reduction of customs duty for import
of equipment. This would particularly help FM stations lower
their infrastructure costs and positively impact their margins
especially in Tier II and III cities as the third phase of
FM bidding is coming up.
Radio
City CEO and AROI president Apurva Purohit said, “Last
year in the budget, the government had reduced the customs
duty for import of equipment for the radio industry from 40
to 20 per cent. Given the further expansion of FM stations
post phase III later this year, one expects this to be further
reduced.”
Likewise,
the industry wants the government to look at reducing the
excise duties on the items made domestically.
Radio
broadcasters feel the current customs duty, countervailing
duty (CVD), additional duties and educational cess are too
high as the total import duties reach nearly 35 per cent.
Nearly all of the capex of setting up studios and transmission
infrastructure is incurred on imported items.
Radio
Mirchi CEO Prashant Panday said, “Considering that radio
projects in the future will come up in small towns (with population
between 100000 and 500000), the government should look at
totally removing additional duties and educational cess and
significantly reducing the CVD on these items.”
Panday
feels that the government must allow the loans given by banks
to the radio sector (in B, C and D category towns as classified
by the Ministry of I&B) to be classified as “priority
sector lending." This will make it easier for potential
broadcasters to access funds when setting up radio stations
in these small towns.
The
government must extend the backward areas benefits to radio
stations launched in B, C and D category towns – giving
all advantages to radio broadcasters, similar to what other
industries enjoy.
Highlights
of FM radio's Budget 2008 wishlist
- 8-year
tax holiday to FM Radio operators. Radio Broadcasting should
be removed from the ambit of service tax, just like print
media.
- Fringe
benefit tax is a non-deductible expense. If a concession
in the qualifying rates is provided to radio operators,
it would really provide a competitive advantage and a boost
to the radio industry.
- The
government must look at reducing the total burden of imported
equipment. It is well known that nearly all of the capex
of setting up studios and transmission infrastructure is
incurred on imported items. The current customs duty, CVD,
additional duties and educational cess are too high –
total import duties reach nearly 35 per cent.
- Likewise,
the government must look at reducing the excise duties on
the items made domestically.
- The
government must allow the loans given by banks to the radio
sector (in B, C and D category towns as classified by the
I&B ministry) to be classified as “priority sector
lending.” This will make it easier for potential broadcasters
to access funds when setting up radio stations in these
small towns.
- The
government must extend the backward areas benefits to radio
stations launched in B, C and D category towns – giving
all advantages to radio broadcasters that are given to other
industries.
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