The media industry is always shined for growth at a very high rate. And if we talk about the Indian media then it globally recognised the fifth media market. Its growth curve has been rising tremendously since its existence. If we talk about 2014, its overall market size was $19billion and it is expected to hike up to or more than $100 billion by 2025.
For a monetary point of view, the implementation of GST is likely to have a positive impact on different media industry sectors like television, digital, broadcasting etc.The fundamental advantage that GST will accrue is that the media tax which these days varies from 8% to 2% is similarly levied growing the common tax as lots as 25%. Moreover, once GST comes into existence, the customer ought to pay a single tax between that can be whatever between 18-20%. But the GST council has raised up the tax fees at 28% additionally which includes full input tax credit score.
Hence the general tax burden on customers is set to lessen and any state-level tax levied will now be available as a credit, decreasing the overall value of production and income.
Let’s see GST impact on media industry thoroughly:
- GST impact on Broadcast services:
Currently, the customers are paying a service charge tax of amount approximately 14-15% for all of its broadcast services like television. Instead of paying this tax, the customers are also supposed to pay another tax named as entertainment tax approximately 8-12% which may be increased up to 25% in nearby future. But the introduction of GST gives a proud movement to all the customers who are feeling tense while paying a large amount of tax every time.
In other words, this new tax paid system issued by the government will allow the customer to pay a single tax of between 18-20% rather than paying 22-28%. So as there is a decline of tax of around 4-8% overall which is a good amount of savings. So we can say, the burden of paying a large amount of tax is declined which is a good sigh of relief.
- GST regime
As per the above step, it is cleared that the introduction of GST has a welcoming impact. It will decline the indirect tax administration in India which assists the country in two ways.
First, it will simplify the customers about the overall payment of tax because this rule charges a single tax instead of two or more. In other words, one can say that GST is highly favourable especially for illiterate customers.
Second, this new law will tremendously improve the ease of operating business in India as overall output will be more.
In other words, once GST will come into play, state tax or service tax will be available as a credit which will decline the overall costs, reduce all double levies of state or service tax, VAT on transactions as well. But it should be noted that the media companies have to pay an additional tax in terms of local body tax above the one set in GST.
- GST impact on film production houses and multiplexes
As per the current survey, film production houses and multiplexes are paying 27% tax on ticket sale, food and beverages as well. That’s I think a big amount of money to be paid by them. But once GST comes, it hikes up the company’s margin of around 5-6%.
Apart from paying the said amount of 27%, sometimes they are also under obligation to pay exorbitant amounts of money in the form of service tax for services taken by them like satellite rights, theatrical rights and much more. So as per the commencement of this new rule, overall tax ratio is declined as all the tax has to pay under the same category. This bill could also gain multiplexes which might be currently dealing with tax tactics from around the different states of a country. This approach that the tax fees would move down and the earnings for corporations could shoot up. Also, the hassles of handling numerous nation Governments with distinct rules could be solved for the good.
Moreover, the cascading taxes typically amount to nearly 6-10 in keeping with a percent of the overall procurement price. Imposing GST through the supply chain ought to permit the manufacturers and studios to set off these taxes, thereby reducing charges materially.
WHY GST ASSUMED TO BE FAVORABLE?
The GST (GOOD and Service tax) introduced by the government is highly favorable especially on media industry because of following reasons:
- Reduces complications of tax calculations:
The GST declines all the complicated or confusing calculations required to be done by the film production houses. Now the only single percentage of tax has to be paid which include all the required list of taxes under one roof.
- Reduces misunderstandings or frauds:
All the payments will be made under the same category hence the chances of fraud payments or misunderstandings will be declined up to zero as the only single amount will be charged by the Indian government. So there will be a single percentage of tax and single payment.
- Increase overall production
As the amount of tax pay on will be reduced resulting hiking up in overall production because in the previous system the maximum profit was grabbed by the government so if less amount of taxes will be detected then why not more profit and more production.
- Dual taxes will be stopped
Payment of taxes two times or sometimes more will be removed from the existence of Good and Service Tax (GST). In other words, only a single amount of money in the form of tax will be charged by the Indian government.
the determined GST module sounds good while discussing, however, in reality, its efficiency remains unknown until it commences and follows. Also, a primary fear with the GST module is that it might permit local municipalities to decide the tax charge on films. But on a preferred word, the bill would maximum likely do lots greater desirable than harm, as it might essentially empower each the center and the states to levy Good and Service tax.
This can’t be executed now because the center cannot impose any form of tax on goods past the manufacturing method, while the nation cannot tax services. GST could consist of service tax, excise duty, countervailing or customs, and many others. In addition to state-level indirect taxes like Octroi, entry tax, VAT/sales tax, entertainment tax, luxurious tax, and so forth.
Once the invoice is made-up, there’ll only be a single state level GST and nation level GSTcomprising the entire value chain for all items and services with some exceptions.
So the impact of GST on media industry cannot be determined exactly. But as the discussions or surveys, positive vibes has been noticed. But the future will never be determined in term of anything. So hope for the best as this new rule revealed by the Indian Government would play a positive and profitable game because without entertainment or media industry, no one can survive happily.
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