GST Impact on the Indian Media Industry
The Media industry in India is known for growth at a faster rate. India is globally the fifth largest media arena. Penetration of smart-phones and the Digital India initiative have led to a spurt of activities in the digital sector. While the growth track is impressive, a number of challenges are posed by the industry. This paper explores the key challenges of the Indian Media sector from a tax perspective.
The implementation of GST is likely to have favourable impacts on the sector and its verticals like broadcasting, print, television, digital etc.
The major benefit that GST will accrue is that the entertainment tax which today varies from 8-12% is further levied increasing the average tax as much as 25%. However, once GST comes into play, the consumer would have to pay a single tax between that can be anything between 18-20%.
Hence the overall tax burden on consumers is set to reduce and any local body tax or state level tax levied will now be available as a credit, reducing the overall cost of production and sales. These costs will now be available for set off/ compensation in the output.
Another advantage of GST will be the elimination of dual tax levies of service tax and VAT on various transactions that occur.
There are other segments of the media industry that would look to the GST regime as a saviour. Imposing GST through supply chain should allow the producers and studios to set off the taxes, thereby reducing costs materially.
As per the current tax system, the industry leaders are expected to pay an exorbitant amount of money as service tax for satellite rights etc. After GST implementation all taxes will come under one umbrella making it much simpler for industrial heads.
The GST bill proves to be a boon for media sourcing chains which currently has to deal with different tax processes in all different states in the country. This means that tax cost will reduce and profits will increase. The hassle of dealing with different state governments with different tax system will be reduced to the greater extent.
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