A Balanced and Growth-Oriented Budget: Rakesh Jariwala, EY

10 Jul,2014

Rakesh Jariwala

By Rakesh Jariwala

 

On an overall basis, the Modi Budget seems to be a balanced and a growth oriented budget.  The Budget has announced the setting up of a fund to provide finance as venture capital and soft loans to start ups.  The start-ups in the M&E space should benefit from this Fund as it would be an additional source for them to raise finance.

 

The introduction of service tax on sale of ad space across platforms (except print media) will have a direct impact on the M&E  sector. Till date, service tax was not applicable on sale of ad space for internet and mobile media.  The impact of this additional service tax levy would really hinge on advertiser’s ability to absorb the input service tax, which otherwise will become additional cost in the hands of the advertiser.

 

The M&E sector has been subject to immense litigation on various direct and indirect tax controversies which extend to transfer pricing, withholding taxes, characterisation issues, etc.  This Budget has introduced measures which could reduce the litigation both past and in respect of proposed transactions.  These measures include roll back of Advance Pricing Agreements to preceding four years, extension of advance ruling mechanism to resident for income tax matters and  resident private companies for service tax matters, simplification of transfer pricing rules, measures to make settlement commission authority more effective for income tax litigation, etc.

 

Rakesh Jariwala, Partner, EY

 

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