FICCI 2012: Day 2 – Key Industry Pointers for the Future: Industry Trends and the Regulatory and Taxation Landscape
Speakers: Sandeep Chilana, Senior Associate,Indirect Tax, Amarchand Mangaldas, Sandeep Biswas , Director , Deloitte, Kiran Reddy, MD, Spi Cinemas, Raja Nagarajan, General Partner, Basil Partners
Moderated by: Aditya Rao, Senior Associate, Amarchand Mangaldas
Press Release by: Wriddhaayan Bhattacharyya,Asian College of Journalism
The discussion highlighted the emerging trends in the media and entertainment industry, mainly in South India.
Sandeep Biswas started the session by talking about the convergence of different forms of media like tabs and smart phones which has paved the way for the emergence of trends in the media industry.
Aditya Rao, who was the moderator, soon took over and expanded on the trends keeping South India at the centre. Digitisation, he said, has an increased prominence now across films, TV, Radio and Print.
There is a preference for local regional channels as the viewers are seeking content in local languages.
He also said that the corporate houses, these days, prefer content based material than star driven.
The penetration of multiplex and broadband has also acted as a catalyst to the new media industry. Mobile and Internet based content delivery platforms offer new oppurtunities.
One needs to imbibe the alternate approach to privacy. Internet and new media also have a flipside which they should recognise and exploit it for the good.
Rao, also spoke about the barriers to growth of the media industry, among which he spoke about the price regulation in the television industry, lack of uniform policy towards FDI.
Among the key changes that he englightened, the Copyright Amendment Act 2012 was discussed at length. It is empowering artists, from literary, dramatic and performing arts and providing them with royalties as well as rights. They are bound to receive royalties equal to the royalties received by the assignee of such rights for exploitation of their works.
Sandeep Chilana spoke about the taxes levied in the media and entertainment industry, amongst which, the maximum is indirect tax. Central excise duty is levied on the manufacture of goods in India which includes the media equipment. Customs for the import apart from VAT, service taxes and entertainment tax.
“ Entertainment tax dates back to the British era and was started by them only. They believed that people were meeting and talking very often which could lead to revolution. The Britishers perished but they left behind the entertainment tax,” he said, engaging the audience in a bout of laughter.
Then, he pointed out to certain service taxes which are exempted by the government. Admission to entertainment events, transfer of copyrights, performance of artists when they are singing classical or folk music forms.
If a foreign actor provides services to India and likewise if an Indian actor,along with an Indian director goes abroad -the liability would be on India in both the cases.
Sandeep Chilana also mentioned an interesting phenomenon called cascading of taxes. All the taxes which are paid become a part of production leading to output which basically goes back to the payers. They pay the tax on tax.
Kiran Reddy’s food for thought was the business perspective involving the Tamil Nadu Exhibition Industry.
He spoke about the ticket rates at various screens. The standard ticket rates being Rs.120 at multiplexes, Rs.85 to RS.95 in a theatre with two screens and more than 800 seats and Rs.50 for single screens. 10% of the tickets are sold at a subsidised rate. The entertainment tax is Rs. 30 % of the gross ticket price and 42 % of the net ticket price. The entertainment tax can be exempted from certain movies if prescribed by the government.
Black ticketing, no transparency and the leakage in the system lead to a cash economy.Corporates cannot compete in an environment where there is a large benefit due to illegal activities.
The process of earning revenue, according to him, was to reduce the length of movies and have more shows. Optimal tax rate will generate more revenue.
The session ended with Raja Nagarajan who said that “ most of the content in the new media industry is personalised at present. “
The convergence of internet and the chanels that are available for viewership for example was reflected upon. The viewers can personalise their set of channels by subscription.
The content of the media industry transcends among geographies. International audience capture the content of the Indian media more than the people of our country do.