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Media
Finance |
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By Vishaal Shah
Budget
2006 was along the lines of the previous budgets as far
as the Indian media industry is concerned. One of the
proposals of budget 2006 was the inclusion of "sale of
ad space or time, other than print media, for
advertisements" under service tax. Further, service tax
is also being hiked from 10% to 12%.
To put things in perspective, the increase in service
tax for selling ad space is clearly stated to be
observed in all mediums - the only exception being the
print medium. As pointed out by experts service taxes
were expected to increase and an increase in the cost
does not stop the consumption of the service. However,
this proposal has created an unequal playing field by
taxing advertising in TV, radio and outdoor mediums but
none on the print. Currently TV and radio have emerged
as a viable medium to reach the illiterate sections of
the society. If advertising is taxed, then any kind of
advertising should be taxed without discriminating
between mediums€
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"sale of ad space or time, other than
print media, for advertisements under service tax.
Further, service tax is also being hiked from 10% to
12%” |
Also brought under the service tax net is the
sponsorship of events other than sports events. However,
key industry players in the non-sporting events aren't
too worried, the reason being that the 12 per cent
service tax can be offset against other indirect tax
liabilities. There was a view earlier that sponsorship
of events, including sports events, was earlier not
covered as a taxable service, there were doubts as to
whether it could be covered under advertising services
and be considered a taxable service. However, this was
clarified by the Finance minister during the
presentation of the budget.
The fact that sports events have been excluded from the
service tax net brings in its share of good news to the
industry. This will help encourage corporate sponsorship
of sports events.
There is more good news for the print industry. The
Excise Duty on specified printing, writing and packing
paper has been reduced from 16% to 12%. During the past
year, there have been two to three price increases led
by growth in demand for paper. Thus, duty cut is likely
to increase the company's profitability. The Budget has
decreased the Custom Duty on paper sector from 15% to
12.5%. However, this may not have any impact on the
paper sector as imports constitute very small proportion
of domestic consumption.
The industry will also reap indirect benefits from some
positive announcements for FMCG companies. Also, excise
duty of 16 per cent on set-top boxes has been levied but
at the same time, reduce the customs duty from 15 per
cent to nil hence there is no impact to the sector. The
Fringe Benefit tax on 'tour and travel' reduced to 5
percent from 20 percent, which is a welcome sign for the
sector.
So this financial year is stirring print medium as
compare to TV and radio for the world of advertising. It
has been expected by some media experts, that all these
changes will bring a constructive signal for every
medium of communication at the end of this financial
year. |
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