MUMBAI: Even as the government is working on subsuming entertainment and other incidental taxes into a goods and service tax (GST) which would be around 18 per cent, cable TV subscribers in Bihar are about to be delivered a blow to their wallets. A couple of days ago, the state’s cabinet stamped its approval on a proposal to hike entertainment tax from Rs 15 to Rs 50 per subscriber.

That’s a 200-plus per cent escalation, and it places the state amongst the top entertainment tax-levying states in India. According to earlier statistics released by the Telecom Regulatory Authority of India (TRAI), Bihar accounts for about three per cent of the cable TV subscribers in India. That means the state has anywhere between two million and three million subs.

According to data released by cable TV tracking firm Chrome Data, Bihar had achieved only 68 per cent digitization by February 2016. Additionally, TV viewers in the state had been opting for DTH, rather than cable with the DTH subscriber base, jumping 32 per cent in just one month, following the imposition of digitization. Estimates are that only the city of Patna has a 400,000 cable TV subscribers.

Currently, TV viewers’ cable bills are anywhere between Rs 250 and Rs 350 per month for their cable TV connection. With the Rs 50 entertainment tax levy, cable TV MSOs are expecting these to rise to between Rs 300 and Rs 400.

The Times of India has stated that the Bihar government is taking this step to plug the revenue gap that has sprung up following the imposition of prohibition. It says the government had a shortfall of Rs 5,000 crore. Additionally, the commercial taxes department has been set a tax collection target of Rs 22,000 crore for fiscal 2016-2017. And, of course, cable TV is an easy target.

However, with disclosures from the fragmented cable TV trade being as they are, observers wonder whether the tax hike will yield the desired results.