Entertainment is a big part of our daily lifestyle. Cable TV is the most easily available and play a vital role in our life . Under the Old Tax System indirect tax system like Entertainment Tax, VAT, CST are levied by state Govt, and the Tax rates ranges from 15% to 110%. Central Govt imposed Service Tax on big cable TV operators and broadcaster who’s annual turnover is more then 10Lac. The Tax on Local Cable Operators (LCOs) was introduced in erstwhile Service Tax laws. Service tax on Local Cable Operators (LCOs) is implemented on w.e.f. 24.02.2009. The service tax currently (pre-GST) is 15%.

The Goods and Services Tax (GST) would be a very significant step in the field of indirect tax reforms in India. By amalgamating a number of Central and State taxes into a single tax (GST).

Now, GST implemented on 1st July 2017. Taxation on entertainment, cable and DTH services shall come down under the Goods and Services Tax regime as the entertainment tax levied by states has been subsumed in the GST. 18% GST is imposed on cable tv operators. The taxable supplies by LCO under the cable TV industry is liable of taxable 18% GST.

Definition and scope of service:

“Cable Operator” shall have the meaning assigned to it in clause (aa) of Section 2 of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995); (Section 65(21) of the Finance Act, 1944)

“Taxable Service” means any service provided or to be provided to any person, to any person, by a cable operator including a multisystem operator in relation to cable services; (Section 65 (105) (zs) of the Finance Act, 1994).

Local Cable Operator (LOC) required to get registered?

All the Existing Taxable Person, already registered under state govt Entertainment Tax are compulsory migrated to GST.

Section 24 of CGST Act, 2017 explains Compulsory registration in certain cases

If a person supplies taxable supply of goods/services

1. Inter-State Suppliers

2. Casual Taxable Person

3. Reverse Charge

4. Non-Resident Taxable Person

5. TDS deductor u/s 37

6. Agents

7. Input Service Distributor

8. Every Electronic Commerce Operator

9. Aggregator

10. Such other person as may be notified by Central/State Government on the recommendations of the GST Council.

GST on Local Cable Operators LCO’s Taxable Supplies :

(a) Supply of Cable TV package to end user (customers)

(b) Supply of Set-top box (STB) and Installation Charges

(c) Repair of STB

(d) Supply of Broadband package

(e) Other related supply made for the provision of Cable TV / Broadband package

1. Taxable Sale/Service (Outward supply) by LCO’s:

(a) Supply of Cable TV package to end user (customers) :

Cable broadcasting service is Taxable Supplies under GST, 18% GST will be charged depending upon the location of recipient of services i.e. Customer.

Local Cable Operator makes a supply of Cable TV to an individual un-registered subscriber ie customer. Since the supply is made to an un-registered person, the LCO will issue a taxable invoice to subscriber. If the individual is a registered person, then the LCO will issue a taxable invoice to the subscriber. On the basis of taxable invoice, individual will claim the credit of GST.

(b) Supply of Set-top box (STB) and Installation Charges :

STBs are generally supplied to customers on activation basis. Customer activate STBs in his name on payment of activation charges from LOC. GST will be paid @ 18% on activation revenue collected by LCO from end-customers. MSO will also charge GST @ 18% on the STB activation charges from LCOs. LCOs will take the ITC credit of GST paid on the activation charges. Ownership of STB will always lie with the MSO since the box is not sold to LCOs. LCOs cannot sell the STB to the customer. They can provide the same on activation only.

(c) Repair of STB

STB repair charges collected from customers. If STB repair charges are paid to registered vendor/person, LCO will claim the GST @18% Input tax credit on the invoice issued by the vendor. If the STB repair charges are paid to unregistered vendor/person, LCOs will be liable to pay GST under reverse charge mechanism. LCO has to pay GST under Reverse charge and the same will be available as Input tax credit (ITC).

(d) Supply of Broadband package or Other related supply made for the provision of Cable TV / Broadband package

Supply of Broadband Services to the end user, LCO also acts as authorised Broadband agents for the internet service provider (ISP) company. The ISP may be an existing MSO, for whom the LCO is already working or may be a different ISP company. LCO collects and remits the amount collected from end user customers to Broadband services to the ISP company. LCO will claim the GST @18% Input tax credit on the invoice issued by ISP company/MSO.

2. Taxable purchases (Inward Supply) by the LCO’s:

(a) Channels subscription Fee by MSO

(b) STB Purchase from Vendors

(c) STB activation charges paid to MSO

(d) STB repair charges paid to Vendor

(e) Cable Network items Purchase from Vendors

(f) Office Rent

Local Cable Operators LCO’s purchase/received Inward Taxable Supply from various Suppliers under GST also get input tax credit on purchase/inward supplies/channels subscription fee paid by LCO.

Availability of ITC for Local Cable Operators on purchase/received Inward Taxable Supply from various Suppliers/vendors.

ITC for Local Cable Operators will now be available on the purchase /Service received (Inward Taxable Supply) like Channels subscription Fee by MSO, STB Purchase from Vendors, STB activation charges paid to MSO, STB repair charges paid to Vendor, Cable Network items components Purchase from Vendors and Office Rent paid to the owner of the premise. Which were not available under the pre-GST regime. So, the input GST paid when renting a premise can be adjusted with the output GST from selling cable tv broadcasting service by local cable operator.

In this case Local cable operator needs to be registered with GSTN, because he is working as an agent of other taxable person i.e. Broadcasting/Broadband Company. Local Cable Operators LCO’s have to Register for GST even if their total taxable revenue is less than the Rs 20lakh/ Rs 10lakh threshold limit.

Local cable operator (LCOs) are selling the cable TV entertainment packages to the end users ie Customers. End users/Customers can only be viewed the channels/Cable TV with the help of Set Top Box (STB) through the supply of signal by cable network, This network is controlled, managed and serviced by Local cable operator (LOC), and this cable network is directly owned, controlled and provided by the MSO. This is taxable under Section 24, Clause (vii) of CGST Act, 2017, Compulsory registration in certain cases.

Every Local cable operator LCO has to register under GST. Even if the LCO is managing only one Cable TV connection, he is liable to get registered under GST. LCO is taxable under Section 24, Clause (vii) of CGST Act, 2017, Compulsory registration in certain cases.

Section 24 of CGST Act, 2017 explains Compulsory registration in certain cases as follows :

The extract of Section 24 of CGST Act,2017 quoted below

24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act –

(i) persons making any inter-State taxable supply;

(ii) Compulsory registration in certain cases Section 24 of CGST Act, 2017(ii) casual taxable persons making taxable supply;

(iii) persons who are required to pay tax under reverse charge;

(iv) person who are required to pay tax under sub-section (5) of section 9;

(v) non-resident taxable persons making taxable supply;

(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

(viii) Input Service Distributor, whether or not separately registered under this Act;

(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52;

(x) every electronic commerce operator;

(xi) every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person; and

(xii) such other person or class of persons as may be notified by the Government on the recommendations of the Council.

The above information clarifies about Compulsory registration in certain cases under section 24 of CGST Act,2017.

Conclusion :Every Local cable operator LCO has to register under GST. Even if the LCO is managing only one Cable TV connection, he is liable to get registered under GST and paid the GST @18% collected from end user ie customer. LCO is taxable under Section 24, Clause (vii) of CGST Act, 2017, Compulsory registration in certain cases. As per Section 24, Clause (vii) of CGST Act, 2017 persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise.

(Author can be reached at GstGuruJi@gmail.com

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17 responses to “GST On Local Cable Operators (LCOs)”

  1. Sandeep Gopalakrishnan says:

    I do not subscribe to the view taken in this article. i feel sec.24(vii) does not compel the LCO to take registration, if eligible for threshold exemption. An LCO is not an agent of the MSO as can be seen from the terms of the TRAI mandated Interconnection agreement signed between them. But if the LCO is acting as a direct agent of the Broadcaster for providing services other than through cable, viz DTH, IPTV etc, then the case differs. Further, as LCO and MSO have statutorily distinct functions and registration requirements, it cannot be said that one is working on behalf of the other.

  2. Chandra Shekhar Pokhariya says:

    Yes

  3. Chandra Shekhar Pokhariya says:

    Hello we are dealing with 2.mso and 100 lco if you want to join us for gst work pls contact at 9456553573 email gstfriends2017@gmail.com

  4. Srinivas says:

    still most of the cable operator not got GST number. does they get any penalties or revoke license from Tax team for not getting GST registration. even i notice some of the MSO also not got GST number. please advise me

  5. सुभाषचंद्र चंदर चव्हाण says:

    mso ने lco ला फ्री लाईन वर्षासाठी दिली असेल तर ग्राहकांचा gst कोणी भरायचा lco नेgst नंबर काढला नसेल व gst भारत नसेल तर त्यास दंड आहे का ? व किती? तसेच mso कंपनी व lco मिळून शासनाचा कर बुडवत असेल तर त्याची तक्रार कोठे करायची.

  6. CA. Nikhil Gupta says:

    I dont agree with you that LCO has to compulsory register under GST irrespective of the turnover since he is an agent of MSO. How come he is agent of MSO? He is not working on behalf of MSO, he is a independent service provider and bears all the risk and rewards of his supply, his aggregate supply is his own supply and not to be clubbed with the supply of MSO. He is dealing on principal to principal basis. If we go by your analogy then a mobile retailer is agent of samsung or apple and a shoe retailer is agent of bata or liberty etc, since they are supplying the products of manufacturer. Section 2(5) of CGST Act defines an agent who ” carries on the business of supply or receipt of goods or services or both on behalf of other”. LCO is not making or receiving any supply on behalf of others. So kindly review your article and make suitable changes.

    • Chandra Shekhar Pokhariya says:

      You are right sir but i think there is a problem
      Stb owned and controlled by MSO if
      The actual cost of package is 200+gst for consumer if mso have 100 box than the output tax will be approx. 36000 direct from consumer if LCO will take the signal @ 50+tax and not registered due to threshold limit than total output will be reduced only 900

      If lco work like agent invoice provide by MSO to consumer than threshold limit will be allow for lco

      If you can guide me better i am waiting for your responce at pls whats app at 9456553573

      Thanks

  7. Sanjeet kumar says:

    hello sir
    i am a cable operator. i have got gst no this month
    but i not fill any return i want to which return need to fill
    Please give me detail about this..
    Thanks

  8. ARUN KUMAR says:

    helo sir
    i m a cable opetor. i have gst no
    but i not fill any return i want to which return need to fill
    thank
    arun kumar
    9541762009

  9. Harpreet Singh says:

    very Helpful Article
    Thanks
    Are the any TDS implications on payment made to MSO by LCO under section 194C?

  10. Vijay vora says:

    Thanks for good guidance

  11. Rajiv vakharwala says:

    Very very good article , clear all confusion

  12. ANAND VARSHNEY (PRESIDENT TAX BAR ASSOCIATION , CHANDAUSI) says:

    CONGRATULATIONS !

  13. Prasad DV says:

    When the LCO / MSO collects deposit against Set-top Boxes, which is refundable if a claim is made within 5 years by the user in accordance with the TRAI regulations, should he collect and pay GST?

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