Govt May Hike Ceilings On Tax Rates For Foreign Tv Cos

The tax burden on foreign telecasting companies like Star TV, Zee TV, MTV and Sony is likely to rise, with the government considering a hike in the ceilings on tax rates. While admitting that a proposal to review taxation for foreign telecasting companies is under consideration, chairman of the Central Board of Direct Taxes A Balasubramanian told Business Standard that the government was reviewing whether the 10 per cent limit should be raised. At present, the taxable income of foreign telecasting companies and/or their Indian arms is determined at 10 per cent of their gross receipts, excluding the amount retained by the advertising agents and the Indian agent of the foreign telecasting companies. Balsubramanian said the 10 per cent limit was like a "thumb rule" and the Central Board of Direct Taxes was trying to evolve a better mechanism for taxing foreign telecasting companies. "A decision in this regard will be taken in due course," he said. Replying to a question in the Lok Sabha recently on whether there was a move to amend the norms of taxing foreign satellite cable TV companies, minister of state for finance (revenue) Dhananjaya Kumar had also admitted that the government was reviewing the norms of taxing foreign telecasting companies. An amount of Rs 71.21 crore was paid by foreign telecasting companies as income tax in the past four assessment years, he had said. However, the companies concerned think that a raise in the 10 per cent limit may prove to be detrimental. "As it is, our company is a loss-making one globally and raising the taxable income percentage of deemed profits would not be palatable," a senior executive of News TV India Ltd, the Indian arm of Hong Kong-based Star TV Ltd, told Business Standard yesterday. Subhash Chandra-promoted Zee Telefilms Ltd, a hugely profitable company, was not available for comment. Foreign TV companies had been expecting such a move and, according to industry sources, have already started lobbying with the government. Sources said the Indian Broadcasting Federation, an apex body of TV companies, advertisers and TV software companies, is likely to take up this issue. It has been indicated that IBF, on behalf of its members, is expected to lobby for a reduction in the taxable income percentage. Although the government is reviewing taxation norms for foreign telecasting companies, it has ruled out any changes in the norms of taxation of cable TV companies for the time being.