SC's Dual Tax Ruling to Hurt Broadcasters, Consumers

The order allows Centre, states to impose separate taxes on DTH and cable TV services

- Lata Jha

A recent Supreme Court ruling allowing both central and state governments to impose separate taxes on direct-to-home and cable TV services has rattled the broadcast sector, already reeling from shrinking margins and digital disruption.

While the order technically applies to the pre-GST (goods and services tax) era, its implications are far-reaching. Broadcasters face a potential wave of retrospective tax demands, and the verdict may set a precedent for state-level levies on digital streaming, gaming, and other online content platforms currently outside such frameworks.

Experts warn it could drive up compliance costs, hurt profits and accelerate market consolidation. "Dual financial burden could affect the profitability and sustainability of broadcasting operations, particularly for indigenous players operating on thinner margins. Coupled with revenue constraints, broadcasters will pass this increased liability down the value chain to consumers," said Gaurav Sahay, founder partner, Arthashastra Legal.

Legal uncertainty and litigation risks arising from dual taxation may also disincentivize investment and innovation in broadcasting, impeding its strategic evolution, he said.