Budget 2009: FBT exemption paramount for media's growth

Kishore Sharma - Televisionpoint.com | New Delhi
The Indian media and entertainment (M&E) sector has urged the Finance Minister Pranab Mukherjee for paying heed to its demand for sops, especially an exemption from paying fringe benefit tax (FBT).

Ambika Soni, Information and Broadcasting (I&B) Minister said exclusively to Televisionpoint.com that the M&E's demand for an exemption from paying FBT was submitted to the Finance Ministry earlier last month.

"A delegation from the film and television producers' guild submitted a pre-budget memorandum to I&B Ministry with a request for the Finance Minister to provide certain concessions to the film industry. We belief the entertainment industry may get some tax benefits this year," Soni says.

The I&B Ministry has also asked for the FBT, currently at 20 per cent, to be reduced to five per cent for both print and electronic media, while an complete exemption from FBT for the film industry is on her cards.

Barun Das, chief operating officer, Zee News Ltd, mooted, "Media companies need to incur several expenses in travel and communication for their operations like news gathering, shows, etc. TV channels should be treated on par with the print media, which enjoys exemption from service tax."

"Government shall take various steps to encourage digitization. For example, make digital set-top boxes cheaper; 4 per cent special additional duty and 8 per cent countervailing duty should be brought down to zero. Treat broadcasting, DTH and cable services as part of the infrastructure industry to fuel their rapid expansion." Das adds.

Amit Sinha, director and chief executive officer, Triveni Media, said, "FBT exemption and service tax reduction is the key expectation for the broadcasters. The rate of service tax is high compared to the print industry. We are hoping that the Government will look into it in this year's Budget."

FBT is charged on expenses like travel, hotel, food and so on, which are incurred when technicians and other unit members go for outdoor shoots. Such expenses are genuine and unavoidable and therefore should not be taxed.

The guild also harped on the differences between film production and other businesses - for example, the decentralised nature of locations. The guild said the film industry could not be treated the same as other manufacturing industries. The guild also advocated other benefits for small producers and sops for the animation sector.

"Expenses on traveling, food, accommodation of unit members are genuine and cannot be considered as any additional benefit. FBT amounts to nearly 20 per cent of production expenses, which imposes huge burden, particularly on small producers." says Sheetal Patel, editor, Televisionpoint.com.

Ronnie Screwvala, chief executive officer, UTV Software Communications, said, "Unfortunately, the Finance Ministry, since the 1991 liberalisation pact, has not realise the power of media and entertainment. We too as an industry may have not made the right efforts, but, i guess we have some ways to go ahead with an optimistic Union Budget 2009.''

Pritish Nandy, chairman and managing director, Pritish Nandy Communications, said that given the opportunities for self-employment of creative and technical talent, the government should offer various tax incentive to help the industry grow.

Munish Puri, chief operating officer, Mirchi Movies, said, "Film production units should get 100 per cent exemption from FBT, if the company deploys its profits from film exploitation into new feature films that are completed within two years.'

Sandeep Bhargava, chief executive officer, Indian Film Company, said, "We would like to have a uniform entertainment tax across India, which is drastically lower than the current state wise entertainment taxes.''