Budget 2016: Mixed bag for ad & media as service tax remains pain point

Ashish Bhasin, Chairman & CEO South Asia, Dentsu Aegis Network and Chairman, Posterscope & MKTG - Asia Pacific

“Overall, there are some positives and some negatives in the Budget. On the positive side, not increasing the service tax is a positive, particularly for the advertising and media sector. General expectation was that service tax may go up in anticipation of higher GST rates. Controlling the fiscal deficit and several steps to invigorate the rural economy and rural consumption are positive signals. A rural consumption revival will help the economy and the advertising and media sector tremendously. On the negative side, there was an expectation, based on what the Finance Minister said in the past, that corporate tax rates would come down. That is not to be so for most large companies. Introducing double taxation on dividends is also a negative. In balance this seems to me to be a mixed bag Budget with a positive bias. If it is able to spur overall economic growth, we could see good times ahead for the advertising and media sector.”

Debraj Tripathy, Managing Director, MediaCom

“One of the key things that I was looking forward to was easing up of service tax payment for the industry. There has been no reference to this in the Budget. So, things stand as they are. The proposal to reduce basic custom duty on wood chips and particles for manufacture of paper and newsprint, from 5 per cent to 0, will bring down newsprint costs for the print industry. Proposed change in excise duty structure on STBs, routers and modems will lead to lower STB prices. A definite positive for cable and DTH companies.”

Zafar Rais, CEO, MindShift Interactive

“The Union Budget 2016 elicits mixed reactions. It refers to ease of doing business by amending the Companies Act in order to set up a start-up in a day. The Budget encourages entrepreneurship across all boards, and also for specific categories like SC/STs. It also talks about skill upgradation and creating clusters for them. The Government had in the past mentioned about cutting down corporate tax and has proposed with regard to small units having a turnover of Rs 5 crore, reduction in corporate tax rate from 30 per cent to 29 per cent. ​This should prove to be rather advantageous. However, increase in service tax from 14.5 per cent to 15 per cent in the form of Krishi Kalyan cess​ is really not an affirmative highlight as it adds pressure on negotiations when looking at net billings that clients demand. From a media and advertising stand point, an increase in service tax, especially on electronic goods, doesn’t seem favourable at all. Currently, India’s exponential mobile penetration and app consumption patterns are driving growth of the mobile advertising industry, and this tax increment could hamper the innovation efforts of the entire ecosystem, comprising mobile development start-ups, advertisers and publishers. We would have preferred a more future-focused policy regarding this particular aspect.”

Sudhanshu Vats, Group CEO, Viacom18, and Chairman, National Media and Entertainment Committee, CII

“Kudos to the Government for presenting a disciplined and inclusive Budget. The emphasis on rural development and commitment to the fiscal deficit target augur well for the economy in the long-run. The proposal for a more conducive excise duty regime for STBs and other ‘entertainment-access devices’ is welcome. While many of us from the industry were anticipating more sector-specific announcements, I’m sure that this Budget will benefit the larger economy and, therefore, by extension, have a positive impact on our industry as well.”

NP Singh, CEO, Sony Pictures Networks India

“From an overall Budget perspective, the enhanced public spending through various social schemes and infrastructure investments should further help to expedite economic growth. The Government has also balanced spending with fiscal prudence by reigning-in fiscal deficit. From a media industry perspective, there were no major changes. I feel that a change in the definition of industrial undertaking for the services industry as well as a push to define the GST roadmap would have been sector-positive. There is a landmark attempt in the Budget to simplify the tax administration, which should herald a friendlier tax regime.”


MK Anand, MD & CEO, Times Network

“Digitisation, in my opinion, is the most important factor for the broadcast sector currently. We are very happy about the excise duty changes proposed for set top boxes, which will help in the last mile infrastructure of DAS 3 and 4. Overall, a stable and positive fiscal situation is good for the economy and that will support our ad sales growth projections. All in all, Budget 2016 looks good for the broadcast sector.”


Ashesh Jani, Partner, Deloitte Haskins

“Media sector gets a mixed bag: Entertainment for all will become expensive as service tax will now be levied on the service provided by way of access to amusement facility such as rides, bowling alleys, amusement arcades, water parks, theme parks, etc. Also, service by way of admission to entertainment event of concerts, non-recognised sporting events, pageants, music concerts and award functions, if the amount charged for admission is more than Rs 500. However, a relief comes through exempting the service provided by way of exhibition of movie by the exhibitor/ theatre owner to the distributor or association of persons consisting of exhibitor as one of its members.”

“Online advertisement at the receiving end: An equalisation levy of 6 per cent of gross amount for payment made to non-residents exceeding Rs 1 lakh a year in lieu of online advertisement or any provision for digital advertising space or any other facility or service for the purpose of online advertisement.”



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