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Chief minister Captain Amarinder Singh has taken the line of “no vendetta politics, no censorship” in his second stint as CM. He has also put the onus of proof on Sidhu.
Chandigarh : Ruling the Airwaves: Lower tax on DTH, per-connection levy on cable TV may not end Fastway’s monopoly; estimates of minister Navjot Sidhu’s dept defy his claim on number of cable connections in Punjab
It is a show playing prime time in Punjab politics. But, as it goes on, cricketer-turned-TV star-cum-politician Navjot Singh Sidhu may have realised it is easier to hit a six, or laugh on TV, than tackle the business of a cable TV czar.
The local bodies minister has been seeking a vigilance probe into alleged evasion of “crores of state and central taxes” by Fastway Transmissions, a multi-system operator (MSO) of cable TV connections, who he claims was patronised by the previous SAD-BJP government of the Badals by “bending rules”. But Fastway is proving to be a difficult catch.
Chief minister Captain Amarinder Singh has taken the line of “no vendetta politics, no censorship” in his second stint as CM. He has also put the onus of proof on Sidhu.
In the last cabinet meeting on October 16, Sidhu was able to push through a proposal to end a differential tax regime that favoured cable over direct-to-home (DTH) players. The Punjab Entertainments and Amusements Taxes (Levy and Collection by Local Bodies) Bill 2017, when passed by the assembly, will bring MSOs and DTH operators on a par; both will have to pay Rs 5 per connection. The local cable operator (LCO) too will pay Rs 2 per connection, including in rural areas.
“This will provide a level-playing field to DTH, and end the monopoly of Fastway,” Sidhu says, adding, “A local operator pays Rs 130 to Fastway while that charge is Rs 70 in states such as UP and Rajasthan.”
Fastway says cable channels are cheaper in states such as UP and Rajasthan as people do not subscribe to English or sports networks.
While the Rs 5 per connection tax on DTH — down from 10% of subscription fee — will hit government revenue by a few crores, it might miss the main target, Fastway, which says its business will keep growing.
Fastway managing director Gurdeep Singh says, “It cannot be called a level-playing field. There is no middle player in DTH business and the lower tax will benefit the companies. Despite having local operators, our packages are priced at one-third the rate of DTH. The per-connection tax will not hit our business as we are seeing a growth of 40,000 to 50,000 boxes per year in Punjab owing to our services, price and infrastructure.”
How many cable connections?
Sidhu, whose earlier proposal of Rs 50 tax per cable connection did not get the CM’s nod though he cited examples of other states, is hoping the Rs 5 tax will reveal the exact number of connections under Fastway.
While the Punjab Entertainment Duty Act, 1955, allowed up to Rs 75 levy per cable connection, the Badal government had, from April 1, 2010, imposed 10% tax on DTH players on subscription fee.
“There are even four TVs in many homes. The number of DTH connections in the state stands at 16 lakh. Those under Fastway are anywhere between 80 lakh to 1 crore. But the company shows far fewer connections on its books to evade taxes,” Sidhu says.
Fastway puts its figure at 24.5 lakh connections in Punjab. Even Sidhu’s own department puts the number “anywhere between 23 lakh and 64 lakh”. “It would be safe to estimate that there are 44 lakh cable connections in Punjab,” the note prepared by his department for the cabinet said.
Why no per-connection tax so far?
Sidhu’s department is the new authority for entertainment tax under the Goods and Services Tax (GST) regime. Earlier, the power wrested with the excise and taxation department, which is under the CM now and was with the then deputy CM Sukhbir Badal in the previous regime. GST has also reduced tax on cable and DTH from 25% — 10% for state and 15% for Centre — to 18%.
While the Punjab Entertainment Duty Act, 1955, allowed up to Rs 75 levy per cable connection, the previous Parkash Singh Badal government had, from April 1, 2010, imposed 10% tax on DTH players on subscription fee.
But, for cable operators, it was Rs 15,000 per year at their place of registration, irrespective of number of connections, allowing both MSOs and LCOs to escape the per-connection tax.
The Centre levied a 15% service tax on monthly collections on all types of connections in which too Sidhu alleges an evasion by Fastway running into crores by “under-reporting” subscriptions.
Sidhu questions why Punjab had foregone a major source of tax from cable when states such as UP charge 25% on gross collections, Karnataka Rs 30 to 60 per subscriber and Maharashtra Rs 45. “The law was toothless; the previous government also made it impotent. We will give it a bite. Once the number of TV connections is out, asi ohnu taang dawange (we will nail Fastway),” he signs off with signature bluster.
