The Indian animation, gaming and visual effects industry have been demanding an infrastructure status along with all benefits and incentives available for the infrastructure industry including the availability of finance at a concessional rate.
Making this demand, the Entertainment Wing of FICCI has said in a pre-budget memorandum to Finance Minister Arun Jaitley that the sector should be allowed tax concessions as per Section 80-IA of the Income Tax Act
FICCI has asked for a 10 year tax holiday for the Animation, Gaming, and VFX industries; and removal of withholding tax on revenues accruing from sales of mobile games in non-India markets as well as removal of withholding tax on the development contracts given to mobile game developers outside India.
FICCI also asked for removal of withholding tax paid by expats working in India for Indian mobile game development companies.
The Minimum Alternate Tax (MAT) applicability for units undertaking animation work in SEZ should be withdrawn to encourage export of animated contents.
The industry body wanted restoration of STPI advantage scheme for AVGC or ITES for another 10 to 20 years and cover/encourage exports as well as IP creation.
To promote domestic gaming market, excise duty on local manufacture should be brought down to nil (similar to film and music industry). This will enable CVD to be brought to zero also. The effective reduction in taxes would be around 15 per cent. Import duty on consoles (gaming hardware) to be brought down to zero per cent to increase the installed base to enable the local developer ecosystem to flourish.
There should be a provision of 50 per cent reimbursable MDA (Market Development Assistance) for travel and registration fees to international market events.
The Government should extend support under Market Development Assistance (MDA) activity for Indian companies to exhibit by setting Indian Pavilions in the world markets. What is needed is to help bringing local production companies to international markets, collect and disseminate information and support creating the infrastructure needed for a healthy media market to develop.