The Telegraph
Since 1st March, 1999
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Taxman knock on cable door

The taxman has, finally, come knocking on the doors of the chaotic cable industry. First step: identify the doors to knock on.

Days before the conditional access system (CAS) Bill that could change all the rules of the cable trade is tabled in the Rajya Sabha, the government has taken a significant step to streamline the largely-unorganised sector in the city and introduce some much-needed transparency.

The income-tax (I-T) department has asked the two multi-system operators (MSOs) in Calcutta to furnish names, addresses, areas of operation and subscriber bases of all affiliated cable operators billed by them, along with financial arrangements, mode of payment and amount of subscriber fees paid to the MSOs (see box).

In the I-T department’s first move to track down the money mechanics on the last mile of the beam business, a letter from R.K. Bhoot, deputy director of income-tax (investigation), reached the offices of RPG Netcom and SitiCable late last week. The two MSOs have been asked to furnish all relevant information on member-operators and sub-operators by December 3.

“It’s a commendable effort to consolidate a sector which has seen uncontrolled growth. Added facts and figures about income from the ground will only serve to make the industry more transparent,” says RPG Netcom CEO Ashim Dutta.

A SitiCable spokesman agrees that the I-T move is one in the right direction: “Till now, there has been little effort on the part of the government to regularise the cable industry, and there was no incentive for those willing to conduct business in a professional manner. This could create a level-playing field.”

While both SitiCable and RPG Netcom have under their fold around 200 master control rooms each, there are hundreds of sub-operators who carry the signal to the 12 lakh-plus cable homes in and around Calcutta and Howrah. “We can only declare details of those who are our direct members. But for the huge base of sub-operators, the IT officials will have to turn to a different source, maybe the posts and telegraph department, where every cable operator registers,” says a SitiCable official.

Tarak Saha, secretary, Forum of Cable Operators, has welcomed the initiative and called for “a bigger government role” in regulating the trade. “We have always maintained that all relevant taxes should be paid. We will impress upon our members the need to file their I-T returns,” he says.

The recently-levied service tax by the excise department — five per cent of total income — was the first tax burden to be slapped on operators in West Bengal, where they don’t even cough up amusement tax, unlike in most other states.

Most operators had absorbed the service-tax blow for the first couple of months, but the new-year subscription hike is expected to factor in this levy, along with revised pay channel rates, being planned by major broadcasters. ESPN has already played its hand with a rise from Rs 24 to Rs 32 per subscriber point. STAR, Sony and Zee-Turner are said to be working out the mathematics of their next hike.

Taxman-forced transparency is fine, says an industry veteran. But the bottomline for the subscriber is simple. Till CAS, that enables the viewer to pick the channels of choice, is enforced, the amount forked out to watch the small-screen fare every month can go only one way — up.

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