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Media & Entertainment: India tax landscape

The media and entertainment (M&E) industry in India is poised for growth at a fast pace. Penetration of smartphones and the ‘Digital India’ initiative have led to a spurt of activities in the digital sector. While the growth track is impressive, a number of challenges are posed before the industry. This paper explores the key challenges of the Indian M&E sector from a tax perspective.

Key challenges faced by the media and entertainment industry from a tax perspective include the following aspects:

• Improving the effective tax rate
• Managing tax risks
• Implications for cross-border transactions
• Cash-blockage on account of high withholding tax rate
• Benchmarking of intellectual property/content transactions
• Multiplicity of indirect taxes

The biggest ask of the industry is the introduction of GST regime in India, which now seems is not far from reality, with the introduction of Model GST law, being made available to public by the Ministry of Finance in June 2016. There are many transactions where the input taxes paid are not available as credit and are regarded as tax cost. Likewise, many transactions attract dual tax levies, because of the peculiar federal structure of indirect taxes in India. GST, to be implemented possibly, may address this issue of cascading and dual taxation impact.

In addition to the above, base erosion and profit shifting, place of effective management and income computation, and disclosure standards pose new challenges for players in the media and entertainment industry.

Read the report to get the whole perspective.
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