Government Looking Into DTH Operators' Tax Rationalisation Demand

The government has said it is considering the long-pending demand of the direct-to-home (DTH) industry for rationalisation of tax structure for the sector which feels burdened by multiple taxes that amount to around 33 per cent of its revenue.

DTH operators feel double taxation - service tax by the central government and entertainment tax by various states - is unjustified and needs to be rationalised.

"We are aware of the issue. It is being discussed and it is now with the Ministry of Finance," Information and Broadcasting Minister Prakash Javadekar told PTI.

The industry players are watching whether and when the government addresses their concern.

"We are paying around 12.36 per cent as service tax and 11 per cent as entertainment tax. Over 33 per cent of our revenue goes in taxation," said Harit Nagpal, president of DTH Operators Association of India.

"Till GST is not rolled out, the industry should get abatement in paying service tax... We are ready to pay taxes but we should not be taxed by the central government and state government both," said Mr Nagpal, who is also chief executive and managing director of TataSky.

The industry is also expecting the license fee to be rationalised.

"We are paying 10 per cent of our revenue as license fee to the government. When it was introduced there was no service tax or entertainment tax applicable on us. Now we are paying taxes, the license fee should also be rationalised," Mr Nagpal said.

At present, India has 35 million active DTH connections and is growing rapidly. The operators are seeking a level-playing field in the sector.

Local cable operators are also providing digtalised feed now with addressability through set-top-boxes (STBs), where a person can pick and choose channels as in the case of DTH.

The government has already completed the second phase of digitisation, involving digitising 1.6 crore cable TV houses in 38 cities.

The third phase of digitisation has to be implemented in all other urban areas (municipal corporations/ municipalities) except cities or towns or areas included in Phase I and II, by September 30, 2014. The rest of the country will be covered under Phase IV of digitisation by December 31, 2014.