Featured Post

CII Seeks Industry Status for M&E in Union Budget

admin   January 7, 2021

The Media and Entertainment sector, through the Confederation of Indian Industry (CII), has sought industry status for itself and infrastructure status for broadcasting, ahead of the Union Budget 2021 to be presented by the Finance Minister on February 1.

The M&E sector has been growing at an estimated gross annual rate of around 13.5% for the past several years and has shown the potential to reach $100 billion by 2030. But despite being one of the top revenue earners for the government and having expanded India’s soft power reach globally, the sector has been conspicuously absent from the list of focus sectors in the Union Budgets for over two decades now.

However, in the wake of Covid-19 pandemic, the M&E sector has been grappling with multiple problems owing to the economic lockdown and social distancing restrictions put in place. Now, through the CII, the sector has come up with a Pre-Budget Memorandum 2021-22 that recommends a number of changes to help it stand back on its feet.

“The sector has been growing at a gross annual rate of 13.5% for the past several years and has the potential to provide millions of jobs and boost India’s export performance. Getting industry status will help the sector get cohesive policies, special schemes and subsidies,” says the pre-budget memorandum.

It also adds that infrastructure status for broadcasting would give it the much needed support to get access to funds at a lower rate for laying cables, and building and maintenance of towers.

Under the direct tax recommendations, CII has sought a change in withholding on royalty payments towards non-theatrical rights. It said that non-theatrical rights of films such as those for digital and satellite platforms are currently subject to a 10% tax. The industry body is of the view that the rate of withholding tax on domestic royalty payments towards non-theatrical rights be brought down to 2% on a par with what is levied on earnings from sale, distribution and exhibition of cinematographic films. “This would come as a huge respite to the industry, particularly for small production houses, by addressing their cashflow issues for working capital requirement,” the pre-budget memorandum says.

“There is a huge shift in viewer preferences and the use of technology for consuming cinematographic films. A lot of films are directly released on satellite or digital platforms, which are becoming the more popular medium of content consumption among viewers. With the advent of technology and its fast growing pace, making a distinction between the medium is not in line with the current trend of consumption,” the memorandum adds.

Further, under its GST recommendations, the industry body has sought an alternative payment mode for discharging GST liability under Reverse Charge Mechanism (by way of utilizing ITC also). The rationale behind the proposed change, it says would address the problem of huge piling up of ITC in media service industry and resolve cash crunch. “Since credit ledger is already allowed for payment of output liability, extending the same for even RCM liability is a small favour to the entire business community in India in these stressed times,” the industry body urged the government.

The industry also wants removal of interest payable whilst reversing ITC availed, from Vendors whose invoices aren’t paid within six months. Citing the 28th GST Council meeting, held on 21st July 2018, which agreed to industry’s representation, the memorandum says, “By delaying the payment to the Vendor, the revenue has not been deprived of its tax due, as the Vendor has already deposited the tax to the Government. While the control to ensure bogus invoices aren’t in vogue is understandable, it is not just to demand further interest also from the recipient, after having got the taxes already from the Vendor.”

To eliminate the cascading effect of tax and thus reduce the tax burden on the end consumer, CII has recommended removal of sponsorship services from the list of services to attract GST under reverse charge mechanism (‘RCM’). Suggesting three alternatives to this change, the industry body says that either sponsorship services should be covered under forward charge “which will allow taxpayers to avail full credit of tax paid on procurements”, or sponsorship services provided by body corporate or partnership firm should be excluded from RCM. As a third alternative, “supplies made which are covered under RCM should be excluded from the value of exempted supply for the purpose of reversal of input tax credit,” says the memorandum.

It further adds that allowing GST input credit on certain regular business expenses like renting or hiring of motor vehicles used for business purposes or food and beverage purchased and outdoor catering services availed during the production of television content and movies will help bring down business expenses for TV programme producers, broadcasters & movie makers and be helpful mostly in case of in-house production. “Amount paid to makeup artist is part of giving creative life to a character in the content which is very important. Please remove the blocked credit for this industry for these items,” it says.

The industry also seeks an increase in the time limit of 24 hours for generating IRN on the NIC portal to 96 hours “for businesses to sufficiently comply with relevant provisions”.

Another issue, CII points out, is that credit notes after a merger or amalgamation is consummated, which is “causing business cost since the credit note with GST is not something the tax payer can upload in the GST portal, which mandates mentioning of the GSTIN & Invoice Number against which the credit note is tagged to.” The industry suggests an update in this regard on the GSTN portal to allow the option to choose Amalgamation as a reason and report Credit notes against invoices raised on earlier GSTIN.

The industry has asked the government to consider as a part of relief package allowing a one year time from the end of the financial year to avail ITC, as the time line of 6 months from end of FY for availing input credit for a financial year is too short given the Covid situation.


Featured Post

FDI cap of 26% for News Aggregators Under Consideration

admin   July 14, 2020

Addressing FICCI Frames 2020 virtually, Amit Khare, Secretary, Ministry of Information and Broadcasting, Government of India, said the demand of 26 per cent FDI limit for news aggregators is being looked into by the government

In order to provide a level playing field to print and digital media in India, the Ministry of Information and Broadcasting is considering limiting to 26 per cent Foreign Direct Investment (FDI) for news aggregators, which have seen accelerated rate of growth driven largely by investments flowing in from countries like China.

Addressing FICCI Frames 2020 virtually , Amit Khare, Secretary, Ministry of Information and Broadcasting, Government of India, said the demand of 26 percent FDI limit for news aggregators is being looked into by the government even as the Ministry of Information and Broadcasting believes in playing the role of a facilitator and educator rather than a regulator of the Media and Entertainment Industry.

During the discussion, Girish Agarwal, Promoter and Director, Dainik Bhaskar Group, highlighted that print media and news aggregator regulations differ from each other. His remarks were in the context of the 26 percent FDI cap on print media, which didn’t apply to news aggregators.

Girish Agarwal added that these discrepancies must be harmonized to create a level playing field for print media and digital news aggregators, as well as radio and podcasts.

Khare also invited M&E industry representatives to provide more clarity on the definitions of various infrastructures included in the proposal to give infrastructure status to the M&E industry. Khare said the Ministry of Information and Broadcasting, Ministry of Finance and NITI Aayog are agreeable to grant infrastructure status to the broadcasting sector. For this, stakeholders should arrive at a common understanding on what infrastructure will be covered within this definition.

He also acknowledged that digital media in India is growing very fast and changing the consumption pattern and consumer behavior. Citing the example of 11 working groups formed by the PMO to aid convergence between various Ministries to manage the COVID-19 crisis, he said that the I&B Ministry is trying for convergence of regulation of digital content and digital platforms, which currently fall under the purview of the Ministry of Electronics and Information Technology.

Technological changes will outpace regulation, so it would be optimal to create a negative list (No Go Zone) of prohibited activities, just like Singapore has done. Outside this list, any platform or medium can function without other regulations.

Khare said, “From the Spartan world of traditional movie marketing, we have now entered a rather sophisticated universe of digital movie making. While looking at different digital mediums is important, one should not forego the importance of personal touch, as the entertainment industry plays on human emotions.”

He added, “Convergence and coordination of various Ministries is mandatory for the smooth functioning of the entertainment industry.”

Stating that there are different regulatory practices for different media such as the Press Council of India for the print media and the Central Board of Film Certification for films, Khare said there has to be a level playing field for all, including OTT platforms such as Netflix and Disney+ Hotstar, which do not come under any regulatory purview as of now.

Khare said OTT is a subject under the Ministry of Electronics, Information and Technology (MEITY), but Information and Broadcasting wants the content part to fall under its purview.

Khare said, “Instead of bringing everyone to the lowest common, the attempt is to have more freedom to all of them. We must try to regulate or rather facilitate the sector. There is definitely a need for a level playing field among the different media.

But, level playing field does not mean getting everyone under very heavy regulatory structures. In fact, the last six years of the present Government has been focused on doing ease of business and having less but more effective regulation.”

Speaking on the challenges being faced by storytellers owing to the fast evolution of technology and digital media, noted Filmmaker Shekhar Kapoor said that both creators and regulators have fallen behind the fast pace of development in the digital media technology, which has thrown a huge challenge for traditional storytellers like filmmakers. He added that the fast emergence of digital platforms keep him on his toes.