The Centre has estimated that there has been a huge under declaration of service tax by cable operators.

The Central Board of Excise and Customs has found in a random check that only 927 cable operators have so far been registered with it in the entire Delhi zone.

And they have paid a meager Rs 86 lakh (Rs 8.6 million) as tax compared with an estimated Rs 6 crore (Rs 60 million) to be paid annually. Though no clear estimates are available on the number of operators in the zone, it is expected to be way above 927.

Officials of the Central Board of Excise and Customs have based their estimate on the fact that for a city of 14 million people with an assumed average family size of ten members, even if less than 50 per cent of the families own a television set, there will be 700,000 television sets.

Even if it is assumed that not all families have cable connections, for a monthly average cable fee of Rs 200, the sum will be far above Rs 6 crore for a service tax rate of 5 per cent. The rate had been hiked to 8 per cent in the Budget 2003.

Government officials have said since these are initial stages of the operation of service tax, the department has not yet wielded the stick on those cable operators who have so far evaded tax. Service tax can be deposited on a half- yearly basis.

Lack of data has also hamstrung the plans of the Central Board of Direct Tax, which has decided to postpone taking any decision on whether to charge a tax deducted at source from cable operators for the sum they pay to foreign broadcasters.

The Central Board of Direct Tax took up the issue sometime ago but has deferred taking any decision on it. It has been guided by the twin considerations that there is no reliable available data on the number of cable operators in the country and the operations of cable operators have been hanging in balance due to the confusion over the implementation the conditional access system.

The Central Board of Direct Tax board has decided to delay taking any decision on the matter till the CAS issue is resolved.

The sum involved, however, is significant as the total turnover of cable operators is estimated over Rs 6,000 crore (Rs 60 billion). The income-tax department does not maintain any separate statistics of such individual group of assesses.

As per the Income-Tax Act, for any income generated in a year, tax shall be payable by TDS or as advance payment during the course of the year.

The cable operators pay fees to foreign satellite broadcasters for carrying the footprints of several channels to television viewers. While they pay TDS to domestic broadcasters, they have not been deducting the same from foreign satellite channels.