Cable viewers to bear service tax brunt

Over 16 lakh cable television subscribers in Gujarat, including over five lakh in Ahmedabad, will end up paying an additional Rs 35 to Rs 50 a month on account of the proposed hike in service tax on cable operators as also charges for watching new channels.

Meanwhile, the proposal has not gone well with cable operators, who say that they will find it increasingly difficult to convince people to pay higher monthly charges as a result of the service tax hike.

The prevailing monthly subscription rates for cable television varies from city to city and area wise in Gujarat.

Subscription rates in Ahmedabad ranges between Rs 150 and Rs 250, while charges in the posh areas of the western parts of Ahmedabad is between Rs 300 and Rs 350.

Cable operators estimate a hike between Rs 15 to Rs 25 hike in subscription charges as a result of the service tax alone. The additional amount will have to be paid by subscribers for viewing new channels that are ready to be launched.

"We were already paying Rs 6 per connection per month as entertainment tax to the state government plus an 8 per cent service tax. According to the new tax proposal we will have to pay 10 per cent service tax and 2 per cent cess. It will be difficult to convince customers to pay up this additional amount,", said Pramod Pandya, president, Ahmedabad Cable Operator Association.

Cable operators are also expecting a hike in subscription rates by channel companies as they are adding new channels.

"If the number of channels will increase, their bouquet prices will be hiked by around Rs 35 to Rs 45", says Manish Shah, a cable operator based at C G Road in Ahmedabad.

Meanwhile, confusion prevails over tax on direct-to-home technology users, as the central government has not announced any tax proposals for DTH users.

"If there can be service tax and entertainment tax for cable operators then why not for DTH users," asked Pandya. He added that the government must clear its stand on this issue.