MUMBAI: DTH service provider Dishtv has increased the price of Set Top Box and its packs in the state of Uttar Pradesh due to 30 per cent entertainment tax levied by the govt. of UP on Set Top Box and gross monthly subscription of DTH companies.
Dishtv COO Salil Kapoor said, "We have increased the prices in the state of UP due to 30% entertainment tax levied by the UP govt. The tax has been imposed with effect from 16 June 2009 and it is applicable on gross monthly subscription revenue. The UP Govt. has assured us to review this tax sympathetically. Till now we were absorbing the additional entertainment tax burden but we have now decided to pass it on to all our new and old customers in the state of UP. The increase in prices is applicable from 2 September, 2009."
"In order to offset this increased cost we are extending a gesture of giving free movies on our Movie on Demand service to the tune of the entertainment tax component. In case any customer shifts residence outside the state of UP then in that case this additional cost will not be applicable," he added.
"The govt. should give some respite to the DTH industry by rationalizing the entertainment tax and multiple taxes as these taxes have a direct impact on the common man. Levying entertainment tax on TV viewing is very archaic, in India TV viewing is as major source of news, views & entertainment for the lower & middle class people. In the recent times DTH has become an effective alternative of infotainment for the people who earlier had a choice of cable only in the cities. In the remote areas DTH has provided much needed relief of bringing news, information and entertainment to the common man who was untouched by the TV revolution in the country," Kapoor said.
The DTH industry is reeling under intense pressure from multiple taxes by the Centre and the States, the tax element of DTH companies goes up as high as 40% and includes service tax, entertainment tax, VAT, license fee where as no other services are burdened with these many taxes.
To make DTH services more and more affordable DTH companies have been providing huge subsidies in the form of low or no cost of STB. While the range of subsidy varies from operator to operator, it is estimated that on every DTH subscriber acquired, the operator incurs a loss in the range of Rs 2,500 – Rs 5,600.
At present, the DTH services are subject to multiple taxation which includes a license fee of 10% on gross revenue to I&B ministry. Then there is a 10.3% service tax charged on the subscription fee revenue earned by the DTH service provider. Also, there is about 12.5% VAT levied on the purchase of hardware by the consumer.