Introduction of the much-awaited Goods and Services Tax (GST) is likely to address the issue of cascading and dual taxation impact on Indian media and entertainment industry, a sunrise sector, says a report.
India is globally the fifth largest media and entertainment market, said a Deloitte report titled ‘Media and entertainment industry – India tax landscape’.
The “biggest ask of the industry” is the introduction of GST regime, which “now seems is not far from reality”, with the introduction of Model GST law, being made available to public by the Ministry of Finance in June, it said.
It said there are many transactions where the input taxes paid are not available as credit and are regarded as tax cost. Likewise, many transactions attract dual tax levies, because of the peculiar federal structure of indirect taxes in India.
“GST, to be implemented possibly, may address this issue of cascading and dual taxation impact,” it said.
The government is keen to pass the GST bill in the upcoming Monsoon Session of Parliament. The constitution amendment bill for introduction of GST is stuck in Rajya Sabha because the main opposition party Congress is demanding some key changes in the proposed legislation.
On Friday Finance Minister Arun Jaitley held a meeting with senior Congress leaders to iron out the differences on the bill ahead of the session starting Monday. Another round of meeting between the two sides is expected soon.
The Deloitte report further said Indian media and entertainment industry is a sunrise sector, with a rapid growth curve.
In 2015, the industry grew at 11.76 per cent with a market size of $19 billion. Overall, the industry is expected to grow at at CAGR of 13.98 per cent till 2018. The report said by 2025, the industry is expected to attain a market size of $100 billion.
As per the report, key challenges faced by the industry from a tax perspective include aspects like improving the effective tax rate, managing tax risks, implications for cross-border transactions, cash-blockage on account of high withholding tax rate, and multiplicity of indirect taxes.
GST, touted as the biggest tax reform in India, will subsume most of the indirect taxes.
Base erosion and profit shifting, place of effective management and income computation and disclosure standards “pose new challenges” for players in the Media and entertainment industry, the report added.