MxMIndia

Tag: Budget 2012

  • What the Finance Minister's proposals mean for business

    Budget 2012: What it means for India Inc

    Local Deals Under Transfer Pricing

    This is bad news for companies as their tax outgo and compliance burden will rise. Firms use transfer prices to shift profits to tax havens. The new rule will increase documentation for companies. Right now, these rules cover only deals between a domestic company and its overseas subsidiary.

     

    No More Tax Surprises

    An advance-pricing agreement is good news for MNCs investing in India. It will reduce disputes as taxpayers would know their liability on transactions within their group companies in advance. These pacts are binding on both the taxpayer and the government, but can be quashed if the taxpayer misinterprets facts. The agreements will end aggressive assessments and reduce tax arrears locked up in litigation.

     

    Declaring Foreign Assets a Must

    Taxpayers must declare overseas assets and income-tax offi cers can reopen their books for the past 16 years. The fi rst development could pave the way for an amnesty scheme while the second will increase compliance burden on taxpayers but check tax evasion.

     

    Dressing Up Cash Trails to Get Tougher for Cos

    Share premium in excess of fair market value will be treated as income. This will increase the tax outgo for firms as share premium has so far been treated as capital. A similar move to impose tax on cash credits, unexplained money and investments will check evasion. It will end the practice of closely-held companies laundering black money by bringing it back as share capital.

     

    Offshore Transfers to Come Under Tax Net

    In a big blow to foreign investors, the government has re-written law so that it can tax indirect transfer of capital assets or property located in India. The amendment, effected retrospectively from 1962-63, will empower the government to impose capital gains tax on Vodafone and other such M&A deals in the past. It’s one step back in tax reforms.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Eco-system for early stage companies set to improve with proposal to remove restrictions on venture capitalists

    Budget 2012: Entrepreneurs may find fund-raising easy with removal of restrictions for VCs

    By Paramita Chatterjee

     

    The eco-system for early stage companies is set to improve as the FM proposes to remove restrictions on venture capitalists, who earlier gained tax benefits on investments in nine specified sectors. The removal of this sectoral cap will make fund raising easier for entrepreneurs going forward.

     

    Besides, the proposal to float a Rs 5,000 crore India Opportunities venture capital fund with SIDBI to help start-ups is seen as a step to benefit micro and small enterprises (MSMEs) across the country. As per estimates of Federation of Indian Micro and Small & Medium Enterprises (FISME), there are currently 26 million MSMEs present in India, of which only 5% has access to institutional funds. “Any kind of equity support to MSMEs is welcome as it was greatly needed,” said Anil Bhardwaj, secretary general at FISME.

     

    However, analysts feel the amount is still too little. “The initiate to set up a fund for MSMEs is good but the budget allocation is small,” said Raja Lahiri, partner at advisory services firm Grant Thornton. But overall, its a good start, as currently not many MSMEs would require capital for expansion, said Bhardwaj.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Five ways in which the government can make monies on the Budget and perhaps reduce duties

    Budget 2012 Anchor: 5 M&E ways in which the govt can make monies on the Budget

    By A N Chorrea

     

    Bizarre as these sound, given that the government appears to be in need of money if all the extra taxes are an indication, here are a few ideas which Pranabda may like to consider for his speech next year.

     

    1. Take a couple of breaks in the Budget speech. Ensure channels shell out 50 per cent of the revenues earned in these breaks to the government

    2. Since it’s a high ratings and readership game, suggest options for profit share to media organizations or just impose stiff charges for budget text document (instant delivery in various formats) and live video

    3. Run a contest on channels, newspapers and mobile phones where you can ask for Predict the Proposals. Those who guess it right, can get prizes as well as entry to the Budget speech. Ask mobile companies to part with revenues

    4. Democratize the Budget. Take views of the public on what to do with proposals. For instance, taxes on cigarette. Press A for 5 per cent, B for 10 per cent, C for 15 per cent and D for no change. Make money through SMS charge profit share

    5. In-speech placement. Shah Rukh’s gain is Saif Ali Khan’s loss. Rather than plug Ra One, Saif should’ve lobbied to ask for a mention of Agent Vinod. Would’ve worked wonders given the March 23 launch. Select in-speech brand placements could get big money (one shaayari in the form of song lyrics may also be allowed).

     

    A N Chorrea is a seasoned media-watcher who writes the MxMIndia anchors under a pseudonym

     

  • Reactions on video from select members of the industry on the sidelines of Ficci-Frames 2012

    Budget 2012: Video reactions from trade

    [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=Cx39gg69K9o[/youtube]

    By Team MxMIndia

     

    At the sidelines of FICCI Frames 2012, where there was much talk about digitization from both the industry and the government, MxMIndia caught up with a few industry members to get their reactions on the Budget.

     

    Nachiket Pantvaidya, Executive Vice President & General Manager, Star Pravah

    To be very honest at this point in time we like to go by the market forces so we don’t expect subsidies from the government. What we do expect is some kind of support in nurturing local talent in providing a base for regional television to shoot and to propagate learning and education in the regional field. Honestly, I think this has to be done through market forces in sync with the government and not through a subsidy model.

     

    Naresh Chahal, Director-Finance, Indian Broadcasting Foundation

    There is no incentive or concession given to set top boxes for the broadcasting industry and the ministry has already issued a notification for digitization and the first sunset date is July 1. So we are not happy with the way the government has not given any concession. We were expecting 0 percent duty on set top boxes to get a set top box at a nominal cost.

     

    Raman Kalra, Director & Partner, Industry Leader- Media & Entertainment, IBM Global Business Services India

    Nothing much was expected from the Budget. There were some expectations though, like FDI will go up for digitization, maybe it will happen for cable, some tax relief, that hasn’t come through but industry has already accepted it. They don’t need these one or two things to go ahead on digitization. It’s moving very fast so it will happen.

     

    Ashok Mansukhani, Director, IndusInd Media & Communications Ltd

    The Budget doesn’t go into the cost to be borne by the government. The government calls digitization a public private partnership, in fact, the private sector will have to spend, the cable sector and the MSOs will have to spend. What we had asked for was that if we spend 40000 crore, we need to also be in a position to be able to get fiscal incentives, tax incentives, duty exemptions, unfortunately all has been denied.

     

    Ravi Mansukhani, Managing Director, IndusInd Media & Communications Ltd

    We are very disappointed, anywhere else if you look, government always helps towards digitalization. There is no infrastructure status, you are not getting any fiscal incentives, nor are you getting favourable interest rates from banks, so basically we are very disappointed because the entire burden of digitization has fallen on the MSO, on the cable sector and there’s going to be a lot of funding required and we are disappointed that there was nothing done on either duties or fiscal incentives.

     

    Amit Dev, Director CMAI & Head of Focus Group of Multimedia

    I strongly feel that government doesn’t take a step in a direction unless they see a significant addition of tax or money making to the exchequer through multiple secondary direct indirect ways. So if there is no mention this year that means it is not among the top ten priority issues of the government.

     

  • No sops on duties for set-top boxes and squeeze on adspend budgets given service tax hike are dampeners in Union Budget 2012

    Budget shows the finger to digitization

     

    By A Correspondent

     

    In the end, one hopes that the angel is in the details. On Day 3 of the annual Frames jamboree put up by industry body FICCI, one hoped that Finance Minister Pranab Mukherjee will announce sops for digitization. The broad proposals didn’t. And for once, one hopes that rather than find the devil, there’s an angel hidden out there.

     

    Okay, there are some nice things in there. Like sops early stage funding from Venture Capital companies to media companies. But the IBF director-finance Naresh Chahal’s outrage was understandable. The government – and infobroad secretary Uday Varma re-iterated it – is firm on the June 30 deadline for the four metros. “If India has to grow, digitization will be a vital ingredient for its growth and thus it is important that we be technologically updated. Digitization is here to stay and we need to embrace this change.” While set-top boxes may not have found favour, LED and LCD television panels and parts of mobile phone memory cards have been looked at favourably by Mr Mukherjee.

     

    So while the FM hasn’t made life tough by adding taxes, the fact that he didn’t cut or even totally drop duties on set-top boxes was a huge dampner. Doubtless, the economically weaker sections in the four metros of Kolkata, Chennai, Mumbai and New Delhi will be forced to cough up monies if they want to catch non-terrestrial entertainment.

     

    Meanwhile, Mr Rakesh Jariwala, Partner & Tax Expert, Media and Entertainment at leading consulting firm Ernst & Young said:  “The key takeaway from the Union Budget 2012 for the Media and Entertainment Sector (‘M&E’) is the exemption to be provided from service tax on Copyrights in Cinematographic films with the introduction of the negative list concept under the service tax legislation.”

     

    The non-inclusion of advertising in television and print in the negative list for service tax is also a dampner given that the levy has been increase from 10 to 12 per cent. This means that there will be a tighter squeeze on adspend budgets. While advertising on big ticket shows will not suffer, the small monies spent on digital, outdoor, radio and other experimental/BTL activities may take a hit given the 2 per cent additional squeeze.

     

    And then there’s an increase in excise duty too which will increase the burden on M&E professionals and corporates and with the easing of Income Tax slabs not quite balancing the increase in expenses elsewhere.

     

    However, the film industry and entertainment event organisers may find some benefit with the recommendations.”The proposed negative list legislation seeks to specifically exclude admission to entertainment events and access to amusement facilities, thereby granting a much needed relief to the entertainment industry,” Mr Jariwalla added. “For film industry, it is proposed that service tax will not apply on transactions between producer to distributor, distributor to exhibitor (by exempting copyrights in cinematographic films) and between exhibitor to cinema goer (by including admission to entertainment events in negative list),” he said.

     

    For entrepreneurs just getting into media and entertainment who were cold-shouldered by venture cap companies given the restrictions, the easing up of restrictions on funding should be a welcome move.

     

    Please refer to Microsite on Budget 2012 for the following stories which were uploaded on Saturday, March 17:

    Budget 2012: Ernst & Young Analysis of Direct & Indirect Tax proposals in M&E

    Budget 2012: What it means for India Inc

    Budget 2012: Reactions from Stakeholders

    Budget 2012: Video reactions from trade

    Budget 2012: Entrepreneurs may find fund-raising easy with removal of restrictions for VCs

    Budget 2012: Ranjona Banerji on how TV Channels fared with their Budget specials

    Budget 2012 Anchor: 5 M&E ways in which the govt can make monies on the Budget

     

  • Reactions from select members of the media and allied sectors on the Union Budget

    Budget 2012: Reactions from Stakeholders

    Rakesh Jariwala, Partner & Tax Expert, M&E, Ernst & Young

     

    “The key takeaway from the Union Budget 2012 for the Media and Entertainment Sector (‘M&E’) is the exemption to be provided from service tax on Copyrights in Cinematographic films with the introduction of the negative list concept under the service tax legislation.  This exemption was not proposed in earlier drafts of the concept paper on negative list.  However, copyright in sound recording continues to be taxed.  Thus, it appears that copyright in theatrical as well as non-theatrical rights in cinematographic films will now remain outside the tax net.  It may however be noted that these changes will come into effect from the date when section 66B in proposed service tax law becomes effective.  In addition to this, concept papers to negative list sought to tax entry into premises (which included theaters for entertainment purposes) and hence, service tax could also apply on admissions liable to entertainment tax.  However, the proposed negative list legislation seeks to specifically exclude admission to entertainment events and access to amusement facilities, thereby granting a much needed relief to the entertainment industry.  Thus, for film industry, it is proposed that service tax will not apply on transactions between producer to distributor, distributor to exhibitor (by exempting copyrights in cinematographic films) and between exhibitor to cinema goer (by including admission to entertainment events in negative list).”

    Vinita Bali, Managing Director, Britannia

    “The Finance Minister has presented a mixed Budget with fundamentally positive steps in some areas, not enough in others & large concern areas like the projected fiscal deficit of 5.1%. A few of the positives include raising the plan outlay for agriculture by 18%, initiatives for R&D in agriculture, allocations for improving warehousing and storage facilities for agricultural produce. All of these, executed well and on time, will address the supply side on food and agriculture that will drive domestic demand and consumption, which is one of the key priority areas. Similarly, some of the specific measures to create maternal and child nutrition programs is an essential step in ensuring that the unacceptably high levels of malnutrition are addressed.”

    Mahesh Krishnan, VP-Home Appliances, Samsung India

    The benefits announced for key sectors like infrastructure, agriculture and education are bound to improve the overall economic scenario. However, the Budget does not bring any relief to the consumer electronics industry, which has been reeling under the impact of rising input costs and rupee depreciation in recent times. The rise in excise duty may lead to an increase in prices of consumer electronics products.

     

    Anurradha Prasad, President, AROI (Association of Radio Operators for India) and Chairperson cum Managing Director, BAG Network

    “Radio industry is the one medium which needs a lot of government support but, unfortunately it seems that the government is putting more pressure on the radio industry, this time by increasing the service tax from 10 to 12 per cent. This I believe is not the right thing to do however we also understand that right now the government is in a populist mode and that could be one of the reasons why the Budget did not focus much on reforms and certainly did not address the business of media or radio in particular.”

     

    Ajay Mitra, Managing Director, India and Middle East, World Gold Council

    Whilst there may be a very short-term impact to demand for gold as a result of this measure, we believe that in the longer-term, this increase (increase of customs duty on imports of gold from 2 to to 4%) will not substantially affect demand. The fundamental reasons for buying gold jewellery are unchanged. They are rooted in Indian culture and weddings. Investment demand is driven by the need to protect against inflation, ease of liquidity and the increasing use of gold as a monetized asset to secure loans.

     

    Ashish Hemrajani, Founder and CEO, Bigtree Entertainment ( BookMyShow.com)

    The service tax exemption on the entertainment industry is a very encouraging step. It would propel the industry towards bigger and better things. This move can also be viewed as a way to offer some respite to the previously challenging situation the industry faced due to heavy taxation.

     

    Dippak Khurana, CEO & Co-Founder, Vserv.mobi

    The exemption of duty on mobile phone parts is surely an ecosystem enabler as it will lower the market prices of phones which are being assembled in India. This will help us achieve not only last mile connectivity but will fuel growth of ancillary sectors such as mobile content development, mobile banking, mobile advertising etc Over all, the government realises the role that mobile devices have to play in enhancing and streamlining IT oriented citizen centric governance framework. This is reflected by two provisions in the government 1) creation of a mobile-based fertilizer management system that will provide end to-end information on movement of fertilisers and subsidies.  2) roll out Aadhaar tablet enabled payments for various government schemes in at least 50 districts within next 6 months.

     

    However, the increase in the service tax from 10% to 12% will adversely affect the masses as mobile phone bills will become higher. Barring this negative point, the rest of the provisions in the Budget are encouraging for the sector per se.

     

    http://pib.nic.in/newsite/erelease.aspx?relid=0

  • Financial portal moneycontrol.com’s new commercial features 'rockstar netas'

    Budget comes alive on moneycontrol.com

    By A Correspondent

     

    Moneycontrol.com recently launched its Budget 2012 campaign Rock the Sabha, which shows some well-known political personalities hitting the high notes.

    The latest moneycontrol.com commercial, which is currently on the air, has set the ball rolling for moneycontrol.com’s Budget 2012 campaign. With key politicians like P Chidambaram, M Karunanidhi, Mamata Banerjee and Finance Minister Pranab Mukherjee playing guitars and jiving to the beats of rock music, the rock concert effect introduces the Budget 2012 coverage on moneycontrol.com in an unexpected way.

    The bold punchline, ‘Budget Comes Alive’, brings to life the brand’s rather sober attitude and creates the right amount of curiosity towards the newly incorporated interactive elements like poll, debates, slideshows, online chats, LIVE blogging and videos on  moneycontrol.com’s budget page, said a release from the company.

    Commenting on the campaign, Lakshmi Narasimhan, CEO, Web 18, said, “Apart from communicating that moneycontrol.com presents the biggest Budget coverage online, one of the key objectives of this campaign was to give a fresh perspective to moneycontrol.com and reach out to new users.”

    Ravi Deshpande, Chief Creative Officer, Contract Advertising, said, “Moneycontrol.com is the undisputed No.1 financial portal of the nation. It has redefined the way finance is presented and consumed in today’s day and age. Which is why we thought its communication too has to make a bold, emphatic statement. If the Budget campaign is disruptive, it’s only to mirror what the brand is actually doing in the marketplace.”

    Kaushik Roy Senior Creative Director & AVP, Contract Advertising said, “It’s absolutely eye-opening! The way in which moneycontrol.com is taking the boredom out of the Budget presentation. The ‘Rock the Sabha’ campaign is an attempt to make that point loud and clear. We hope it will attract newer, younger audiences, in addition to exciting millions of existing users.”

    The ad can be viewed at http://t.in.com/budget2012.