Service tax exemption to leave advertisers with surplus funds

“It is good news for growing sectors like outdoor and digital. The service tax exemption would ultimately benefit the advertisers who spend a lot on outdoor and Internet,” Madison World chairman and managing director Sam Balsara said.

Service tax exemption on advertising on media platforms, excluding TV and radio, could result in availability of up to Rs1,500 crore more to advertisers for spending on campaigns, according to industry experts.

“Given that marketing budgets of companies always take into account the service tax component, now there will be more money available to be spent on media other than TV and radio (which are not exempt from service tax),” ZenithOptimedia managing partner Navin Khemka said.

According to him, the total annual advertising spend in India is currently estimated at USD 5 billion (around Rs26,000 crore), of which around 45% is spent on television and radio.

“Now if other advertising media (like print, outdoor, digital) are exempt for service tax, around Rs1,500 crore, which was earlier spent on service tax by marketers will now benefit advertising and media planning companies,” he added.

In the Budget for 2012-13 Finance Minister Pranab Mukherjee announced that “selling of space or time slots for advertisements other than advertisements broadcast by radio or television” will come in negative list and will be exempt from 12% service tax.

“It is good news for growing sectors like outdoor and digital. The service tax exemption would ultimately benefit the advertisers who spend a lot on outdoor and Internet,” Madison World chairman and managing director Sam Balsara said.

According to the 'Pitch Madison Media Ad Outlook 2012' (PMMAO) report the Indian media advertising industry has been pegged at Rs25,594 crore in 2011.

Commenting on the impact of the Budget proposals on media and entertainment sector, KPMG partner Himanshu Parekh said: “Earlier advertising in print was only exempt from service tax, while TV and radio were not exempt. Now even other media like outdoor and digital are exempt.”

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Public Interest Exclusive
Aviation ministry denies receiving Praful Patel’s letter seeking a probe in Air India’s ‘irregularity’

Despite statements of both Mr Patel and the present aviation minister Ajit Singh being shown prominently on various TV channels, the ministry informed RTI activist Subhash Aggrawal that “no information is available”

About a month ago, a palpably embarrassed Praful Patel wrote a letter to the present civil aviation minister Ajit Singh, seeking a probe into allegations that in 2010, the national carrier Air India had deployed bigger aircraft to and from Male in Maldives to accommodate Mr Patel’s family. Despite the wide media coverage Mr Patel’s letter got, now the civil aviation ministry says that it has no knowledge of its existence.

In reply to RTI (Right to Information) activist Subhash Chandra Aggrawal, who had asked for a copy of Mr Patel’s letter, the PIO of the ministry replied “No information is available.” Similarly, Mr Singh’s comment, which too was reported in the media that deploying of larger aircraft is an ‘irregularity’—is also not available with the ministry.

“It is indeed adding further to the impropriety now by Union civil aviation ministry to decline providing Praful Patel’s letter seeking a probe in the matter despite statements of both the concerned Union ministers in this regard having been shown prominently by various TV news channels. Instead of hiding the facts, the ministry should probe the matter,” said Mr Aggrawal.

In April 2010, Air India had deployed larger aircraft to apparently accommodate the family of Patel on their trip to Maldives from Bangalore. The matter was revealed via a RTI petition. The larger Airbus deployed to accommodate Mr Patel’s daughter and her in-laws for their vacation, however, had to operate under loss because many seats were empty on the two-way trip. Read the details here: Air India must disclose details of planes rolled out for VIPs

Despite a Central Information Commission (CIC) directive, Air India refused to supply all details, and asked for a review of the CIC decision. Finally, Air India had to disclose the passenger list and the names of officers who validated the decision. Moneylife had written about it. Air India finally admits that it gave bigger plane to Praful Patel’s family

The matter received good amount of media attention, as Mr Patel, who was the then civil aviation minister himself had ordered this misuse and caused losses to the national career. As public sentiment built up against him, Mr Patel was forced to write to his successor and urge a probe into the matter.

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iGATE Patni bets on product engineering biz to rake in more revenue

Bullish on its product engineering services business, iGATE Patni executive vice-president and head of PES Satish Joshi said, “We expect almost 25% of our total revenues to come from the PES business in 2-3 years. Currently, about 15% of the revenues accrue from PES business”

Tiruchirapalli (TN): Bullish on its product engineering services (PES) business, integrated technology and operations firm iGATE Patni expects nearly 25% of its overall revenues to come from the segment in the next two to three years, reports PTI.

“We expect almost 25% of our total revenues to come from the PES business in 2-3 years. Currently, about 15% of the revenues accrue from PES business,” iGATE Patni executive vice-president and head of PES Satish Joshi said.

The PES business provides end-to-end product development and product life cycle management including research and evaluation, electronic and engineering design, system development, sustenance and maintenance and verification and validation targeted at automotive, industrial automation and control, consumer electronics, mobile, wireless and telecom and semiconductor industries.

The company was expanding its presence in the PES space, specifically looking to strengthen the customer base in EMEA (Europe, Middle East and Africa), APAC (Asia Pacific) and Japan.

Currently, EMEA and Japan markets constitute more than 30% of the total PES business, Mr Joshi, here recently, told PTI.

iGATE Patni closed the year ended 31 December 2011 with revenue run rate in excess of $1 billion.

On the future plans, Mr Joshi said “We are also looking to expand into new industry segments including media & entertainment, plant design, plant automation and mining.”

To a question on the Indian market, he said the domestic market was an important focus area for the PES business. “The company is looking to increase its focus on the Indian market, especially in the industrial automation, transportation, energy and medical & healthcare sectors”.

He also said the company planned to recruit 1,500 people for its PES division over the next two years. Currently, the PES team had a strength of over 3,200.

The PES business of iGATE Patni would be expanding in new markets and mining deeper into existing customers. “The company is looking at becoming most preferred strategic partner for entry into emerging geographies. iGATE Patni will also be investing in high-end tools, R&D infrastructure and training facilities,” he said.

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