Web 2.0, IPTV and many concepts and technologies of their ilk are redefining this sector, which has the propensity to be redefined very often. Increasing disposable incomes among developing nations and growing rural and semi-urban connectivity are fuelling the growth in this sector.

The boom in this sector has seen laws and the regulatory framework trying hard to catch up. This has resulted in numerous not-so-ready legislations hitting the seen and getting remodeled frequently. To add to this is the fact that fast growth always results in enhanced focus on sales, increasing the pie and increasing one’s share in the pie. Thus, from the perspective of taxation, even regular compliances pose significant challenges and at times lead to large exposures.

Companies in this sector come largely under the service tax net on the indirect taxation side. Value Added Tax and sales tax liabilities are also significant.

Online information & database access or retrieval services, broadcasting services and video tape production are some of the key services rendered. Service tax procedures become complex on account of certain services being rendered outside India and certain services being rendered from outside India thereby triggering reverse charge. Input services include maintenance and repair, telecommunication, and transportation among others.

The entertainment industry, particularly those selling gizmos dedicated to games experience numerous Customs and VAT related issues during the course of their operations.