GST or Service Tax for Cable Operators – Is it Applicable?

Cable Television, is the focal point of leisure and entertainment for most of the population in India, be it rural or urban. From the cartoon that is a mandatory meal companion for three years old to the nail-biting soap or daily dose of news for the 60 years old, television has been irreplaceable in our lives. It is also the cheapest mode of visual entertainment available, especially in rural areas, where channels like Doordarshan are available free of cost, making it their connection to the outside world and it’s happenings.

There have been multiple debates on whether the Goods and Service Tax or GST is advantageous or not in the various sectors that it has been implemented on, since its commencement. Needless to say, in the sector of cable TV and DTH, it has certainly come as a boon. Prior to GST, cable TV operators had to pay numerous indirect taxes such as entertainment tax, service tax, VAT, etc. The tax rates levied by the states ranged from 10-30 percent.

Additionally, they had to pay a service tax of 15 percent to the Central government. DTH companies were also required to pay 10 percent of their gross revenue as a license fee to the government. The service tax on Local TV Operators or LCO’s was also 15 percent before.

GST amalgamated the indirect taxes, making it a single Entertainment tax that was to be levied. The additional charges under ITC (Input tax credits) like channels subscription fee by MSO (Multi-system operators), STB (Set-top box) purchase from Vendors, STB activation charges paid to MSO, STB repair charges paid to vendor, cable network items, components purchased from vendors and office rent paid to the owner of the premise, etc. is to be incurred by the customers and non-inclusive in the GST.

These were not available under the pre-GST regime. So, the input GST paid when renting a premise can be adjusted with the output GST from selling cable TV broadcasting service by the local cable operator. Every cable operator has to mandatorily register under GST, including LCO’s with an annual turnover of fewer than 20 lakhs.

Though GST has resulted in being more profitable to cable TV operator than the previous taxes that they had to pay, they are still not satisfied with the 18 percent rate and have bid for it to be reduced further. They have sought to revise the GST to five percent from 18 percent.

Firhad Hakim, the state municipal affairs minister was quoted by the Cable TV Equipment Traders & Manufacturers Association (CTMA) saying that cable television services are essential services and should not have 18 percent GST which is in effect at present. As of now, their request has come to no avail and the chances of the same happening are bleak.

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