Govt to rationalise tax on DTH, cable firms

In order to rationalise the entertainment tax levied on the direct-to-home (DTH) companies and the cable operators by the state governments and also to encourage the cable industry to switch to the use of advanced optical fibre cable instead of the copper wire cables, the Ministry of Information and Broadcasting has set up two sub-committees.

While one committee will look at the rationalisation of entertainment tax levied on the broadcasting sector, including the DTH and cable companies, the other will look at the rationalisation of 'right of way' charges levied by the state governments and the local municipal bodies.

The right of way charges are levied for laying underground cables and also for putting up wires on electricity poles. Currently, depending on the city, the average right-of-way charges for laying underground cables is Rs 2,50,000-Rs 3,00,000 per km.

The entertainment tax on DTH companies ranges between 15 per cent and 45 per cent. Currently, the tax element of DTH companies goes up as high as 56 per cent per subscriber and includes service tax, entertainment tax, value added tax and licence fee.

The entertainment tax sub-committee will have representations from broadcast regulator Trai, entertainment tax commissioners of the states of Tamil Nadu, Maharashtra, Delhi, Madhya Pradesh, West Bengal and Rajasthan along with representatives from the cable and DTH companies.

Another 11-member sub-committee will look into the rationalisation of 'right of way' charges levied by the state governments and the local municipal bodies.

Welcoming the move, A Mohan, executive vice-president, regulatory affairs of Essel Group, said: "It has been long overdue. We feel this move is a step in the right direction that will go a long way in making both cable and DTH services affordable to the consumers."

Mohan is also the vice-president of MSO Alliance, the apex body of all large cable distributing companies.

Currently, the cable industry reaches about 76 million homes in the country, while the DTH companies like Dish TV and Tata Sky have nearly 5 million subscribers between them.