MUMBAI: The 2008 – 09 Budget has certainly made the common man happy and joyous. As far as media and entertainment sector is concerned, the custom duty exemption on import of set top box (STB) raw materials will benefit the Direct-To-Home (DTH), Internet Protocol Television (IPTV) and cable TV operators.
Additionally, animation and post-production studios that import softwares also stand to benefit from the custom duty exemption on a few IT and hardware components. Excise duty reduction from 12 per cent to eight per cent on printing materials is also being looked upon positively…
From corporates’ perspective, corporate tax has not been lowered but harmonization of dividend distribution tax between holding and subsidiary is beneficial.
Reduction in personal income tax for salaried professionals is expected to increase the disposable income on consumers, which the media and entertainment industry foresees as a major plus point.
A provision of Rs 750 million (Rs 75 crores) has been made for the Indian Council of Cultural Relations to design and implement a programme to project India’s film, music, literature, dance, art and cuisine in a sophisticated and subtle manner.
Here’s what the media and entertainment industry head honchos have to say on Finance Minister P Chidambaram’s Budget 2008:
Dish TV managing director Jawahar Goel
At present there is zero duty on import of set top boxes. The Finance Minister has removed duty on import of specified parts of the set top boxes. This will provide leverage and opportunity for DTH players to evaluate the option of manufacturing STBs locally.
Since the countervailing duty (CVD) is reduced from 16 per cent to 14 per cent, the cost of the Customers premises equipment (C.P.E) will go down to the similar affect and will benefit the DTH operator.
For the first time the Broadcast and Film industry has been given a status along with the IT sector thus bringing down the duty on the capital equipment from present level of 10 per cent to five per cent, which will further boost the investments in the industry.
Studio 18 chief financial officer Manish Thukral
Since this is the last Budget before the general elections much action was not expected. The Budget has been more populous in nature and there is a balance between growth and inflation control. As corporates we were looking forward to some lowering in Corpoarte Tax, but that has not happened. Waving off custom duty from the set top boxes will be a boost to the DTH players and will even benefit the film industry. As digital content subscribers will increase we will be able to aptly monetize digital rights of movies from the pay per view audience.
Pyramid Saimira managing director P S Saminathan
This year’s budget has focused on agriculture, which is good. As far as the entertainment industry is concerned, the finance minister has not announced any measures, which will directly benefit us. He has been considerate about convergence products by reducing the duty to five percent, which will indirectly have an impact on us. I am extremely happy with the results.
Shree Ashtavinayak Cine Vision Ltd director Dhilin Mehta
Overall the Budget was good, but it was sector specific. Corporate tax cut was not looked at in the budget; it could have improved the situation of the corporates. There were no extraordinary announcements for future growth of entertainment sector especially the film production and distribution houses, which is needed for growth. Incentives like reduction in indirect taxes could have been provided for. The Budget has been made keeping in mind the common man. But overall, I thank the finance minister as he is considering the total economic growth.
PVR Cinemas chief financial officer Nitin Sood
The reduction in personal income tax is expected to have a positive impact for us as a multiplex company because people will now have higher disposable income and therefore spend more towards entertainment. The lowering of customs duty from 7.5 – 5 per cent is also good but it is not clear if it will be applicable to our equipments. The entertainment sector has remained largely untouched although it is the fastest growing.
Prime Focus Limited chief financial officer Nishant Fadia
The Hon’ble FM was expected to present a populist budget. It has been disappointing for the media and entertainment industry, as yet again there was no sops or recognition for our sector. As one of the fastest growing sectors, this industry would have liked a tax holiday or special tax concessions.
Though the Indian corporate sector is doing quite well, we were also expecting either a reduction in corporate taxation or the removal of surcharge. On the positive side, reduction of CENVAT (Central Value Added Tax) in import duties and customs duty on equipments are steps in the right direction. The revision of personal taxation is encouraging as it widens the tax base in India which is critical to our growth.
Crest Animation chief executive officer A K Madhavan
Looking at the current situation where we are witnessing global slowdowns, I believe the budget is pretty balanced. We are in stage of major growth; hence this budget has been quite sensible. As far as the animation industry is concerned, the IT changes are going to be quite beneficial since we are into a lot of softwares. However, largely, our industry does not depend upon the budget. We are more or less a private sector; even the drastic changes in the currencies don’t affect us.
UFO Moviez vice chairman Raaja Kanwar
Last year’s Budget had provided wavers for Digital Cinema, therefore we were not expecting anything this year. But the reduction in customs duty for set top boxes and convergence equipments has been encouraging for the industry. This year’s Budget has been more in favour of the common man and according to me, the media and entertainment sector will definitely benefit.
Eros Entertainment chief financial officer Sabapaty
The budget has been balanced because this is a year of elections. The harmonization of dividend distribution tax between holding and subsidiary is positive for Eros. But there has been no reduction on import duty of film, which is our major expenditure. The reduction in income tax of salaried professionals will be good for our employees.
Inox chief operating officer Alok Tandon
At the macro level I do not see anything in 2008’s Budget for the media and entertainment industry. As a multiplex company we were expecting certain amendments in service tax and rent, which we haven’t received and neither has there been an duty reduction on import of cinema equipments.
Balaji Telefilms chief executive officer Ramesh Sippy
As an industrywalla the budget is flat. There has been no mention of the film industry. The finance minister has made a point of service tax benefit on miscellaneous items. Now the question is if there are any additions in the list, is it in our favour or not?
P9 chief executive officer Navin Shah
The Indian film industry is our biggest export to the world today, India is globally acclaimed because of its art of filmmaking with not only the Indian diaspora but also the mainstream international audience from various countries following our craft. The Finance Minister should have had at least offered a relaxation to the industry by marginal reduction of the entertainment tax. Even a tax reduction of five – 10 per cent will change the economics of the business.
One third of the film producers’ revenue goes to the government in the form of entertainment tax. Seventy per cent of the films, which are written off as flops will turn out to be economical hits or at least recover their costs in the box office. Small producers will have a chance of decent survival. This will result in more and more films becoming profitable with bigger and better projects being mounted etc.