The media industry is growing leaps and bounds due to the rise in consumer demand and mammoth advertising revenues. With a growth rate of 15.8% the Indian television industry alone has stood strong among the other major developed economies.
The increasing digitization and high use of internet since last few years has also contributed to its growth. The Indian media and entertainment sector combined is growing with 14.3% CAGR while revenues from advertising are growing by 16% year on year. With such eye-opening figures, the impact GST news is being lapped up by experts so that impact of new tax regime on the media industry can be discerned.
Impact of GST on Media Industry
As per GST news, the implementation of GST is likely to have advantageous impact on the media sectors like print, television, digital etc. In the current tax regime, the broadcast services of cable TV providers and DTH service providers like Tata sky, Dish TV were the sufferers of dual taxation. After the implementation of GST, they might get some respite. After the GST rule where the service tax and the state-level entertainment tax will get subsumed, the Multi-system operators (MSOs) can expect to lower their tax incidence by 5-10% on their cable TV services.
They may also end up saving on the capital goods import, but no confirmation on this has yet come. The MSOs who were operating in the states with higher ET or entertainment tax will obviously be benefitted more. The companies like Hathway Cable, DEN Networks, Siti Cable, etc. are the part of the beneficiary list as per GST news India.
This is one industry probably who is waiting most for the implementation of GST. As per GST news, media sector is quite buoyant since they believe after GST, the variations and uncertainties which existed on the entertainment tax will be resolved and also the legal issues between MSOs and local cable operators will be resolved. MSO were also paying entertainment tax on the behalf of many Local cable operators hence having high rate of tax, which is expected to be relieved now. GST news India suggests that the MSO that operates on the low entertainment taxed states might not be hugely benefited but they may gain on the capital goods tax cost.
Business news suggests that cable service providers were paying service tax of 15% along with the average entertainment tax of 5-10% presently. As per GST news, with the new GST tax slab of 18%, the tax component for them will decrease. But on the other side, they will have to pay more tax for their broadband service as the GST news India points out. Hence, the 2% to 3% tax which they were saving will get nullified by the increase in taxes on their broadband business. But if we include the tax on import of capital goods then it will result in a positive situation for them. DTH operators under the GST regime, will get the benefit much more than the cable TV providers as they have direct access to the consumers and they have no broadband.
Multiplexes like PVR and INOX, which is another segment of the media, will also stand benefitted after GST rule as the GST news says. Films were levied a huge entertainment tax. A unified form of tax which will be charged through the supply chain would lessen the cascading impact of tax for them. Film producers are also foresee cut in costs after GST because they are paying service tax as well as VAT. For them, input taxes were not available to be set off against output tax and hence it was a huge cost.
However, the tax for advertising agencies may get complex. As per GST news since advertising agencies operate in various states and after implementation of CGST and SGST, the matter will become even more complicated. Initially, there might be an increase due to current 15% service tax to 18% GST, but it is too early to say anything in this regard.
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