The Hindu Business Line : Media bids adieu to FBT

“This had been a major irritant to the service industry at large, so the abolishment is a big relief. If you consider 20-40 per cent of your employer cost was covered, it makes a difference of 1-2 per cent to the topline,” said Mr Maheshwar Peri, Publisher and President, Outlook Group.

The Budget also proposes to extend by another six months, till the end of the year, the waiver of 15 per cent agency commission on Directorate of Advertising and Visual Publicity (DAVP) advertisements and a 10 per cent increase in the DAVP rates. This had been announced in February as a special relief to print media.

The offer, however, comes with a rider – it’s subject to documentary proof of loss of revenue from non-governmental advertisements. This disqualifies most major papers, says Mr R.K. Agarwal, CFO, Jagran Prakashan.

“The abolishment of FBT could result in a rough saving of about Rs 3 crore a year, however, we will be losing some on the service tax on railway freight,” he added.

“There was no change in corporate tax otherwise it was a good Budget with a few positives for the industry. The abolishment of FBT, levied on gifting and travel expenses, could result in a tax saving of about Rs 4-5 crore a year,” said Mr Piyush Gupta, Chief Financial Officer, HT Media.

The film industry also welcomed the proposal.

“Abolishment of FBT is a major boost. During shooting on outdoor locations, film production houses incur huge expenses on account of conveyance, use of hotel, boarding and lodging facilities. And on these costs, we had to pay FBT of about 20 per cent. This was a big burden on us,” said Mr Mukesh Bhatt, Chairman, Vishesh Films.

According to Mr Farokh Balsara, Partner & National Leader, Media & Entertainment Practice, Ernst & Young, “The media and entertainment industry is pleased with abolition of FBT and extension of stimulus package to print media till December 2009. However, the joy is short-lived with the MAT being hiked to 15 per cent against 10 per cent.

However, the media industry, which has also been affected by the slowdown, was expecting some furthers sops from the Budget. Said Mr Hiren Gada, Director, Shemaroo Entertainment, “The general media sector was expecting some more fiscal benefits to tide over the slowdown and smoothen some operational challenges that the industry is facing.” Removal of FBT will help the media and entertainment sector overall, he added.