(Service) Tax on Newspapers is tax on knowledge
Strongly criticizing the government for its proposal to tax sale of newspaper space in the recent draft Service Tax circular, INS President Jacob Mathew termed it as "alarming" and "retrograde" and said that any tax on newspapers, in effect, is a tax on knowledge. Mr Mathew had some more strong words:-
• It has no legislative sanction and could have a disastrous effect on the newspaper industry
• A 10.2 per cent tax on value of advertising space, as proposed in the Finance Ministry's draft circular of October 10, will "stunt" the growth of the newspaper industry, and therefore should be dropped to allow Indian newspapers to grow freely in a democracy
• The government's logic (earlier) was that the advertising space sold was not a service.
• It will adversely affect advertising revenues and the reach of the newspapers as well as burden the readers
• It also undermines the Right to Freedom of Speech and Expression guaranteed by Article 19 (1) (a) of the Constitution
• The proposal should be dropped to allow Indian newspapers to grow freely and face the global challenge.
• The Constitution honours the Press as one of the four pillars of democracy, and newspapers are exempt from Central excise and sales tax as they are not considered mere commodities
• The proposal sought to fundamentally change the basis of tax
• In the past, the Supreme Court has invariably struck down burdensome controls and levies on newspapers and held them unconstitutional