Media and entertainment sector needs tax rationalisation: KPMG
March, 06th 2012
The media and entertainment sector needs simplification in cumbersome tax laws, management consulting firm KPMG has said.
"The industry hopes for simplification of the onerous tax laws and resolution of some of the long standing tax controversies impacting this sector. The levy of service tax and value added tax (VAT) on copyright acquired in content is a major pain point for the industry. Huge levy of entertainment tax in excess of 30 to 40 percent on film exhibition is another area of major concern," KPMG India partner Himanshi Parekh said.
On the broadcasting sector, he said the industry is plagued with a host of tax issues, the prominent ones being uncertainty surrounding tax deduction at source ( TDS) on several payments and higher withholding tax at 20 per cent in the absence of permanent account number (PAN), he said.
"Taxation of foreign telecasting companies ( FTCs) also continues to be a bone of contention between these companies and the tax office. Issues surrounding potential levy of service tax as well as VAT on activation charges and recharge coupon vouchers has been haunting the direct to home (DTH) television industry," he said.
He also said that advertisements in free-to-air mediums like radio should be treated differently and lower or zero service tax should apply for these.
"The radio industry also needs clarity in tax amortisation rules for intangibles like license fees paid by radio broadcasters which need to be amortised over the license period," he said.