GST on Advertisement, GST Rates on Advertisement with Impact Analysis

GST on Advertisement, GST Rates on Advertisement with Impact Analysis. It is indeed a great pleasure to witness and be a part of this biggest economic reform of the country since independence. GST is based on the concept of “One Nation; One Market; One Tax” and intends to provide a competitive edge to the Indian products in the International market. here we provide complete information regarding GST on Advertisement or GST Impact on Advertisement Services in India.

GST on Advertisement

GST on Advertisement New

GST Rates on Advertisement Services

Description GST Rate  (%) Taxability under the Service Tax
(i) Selling of space for advertisement in print media 5 Negative list – Sec 66D(g)
(ii) Other professional, technical and business services other than (i) above [comprising also the advertising services and provision of advertising space or time] 18 Taxable

Advertisement – Classification

338 Group 99836​ Advertising services and provision of advertising space or time
339 998361 Advertising Services
340 998362 Purchase or sale of advertising space or time, on commission
341 998363 Sale of advertising space in print media (except on commission)
342 998364 Sale of television and radio advertising time
343 998365 Sale of internet advertising space
344 998366 Sale of other advertising space or time (except on commission)

Advertisement Service under GST

Meaning of “advertisement” [Sec 2(a) of the Exemption Notification]

“Advertisement” means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.

[Definition is same as was in Service Tax – Sec 65B(2)]

Meaning of “print media” [Sec 2(zt) of the Exemption Notification]

“Print media” means,—

  1. “book” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;
  2. “newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867.

[Definition is same as was in Service Tax – Sec 65B(39a)]

Scope of Advertisement service

  • Selling of space or time for advertisements such as advertisements in conveyances, advertisement through ATM, internet, advertisements on buildings etc. is chargeable to tax under this category.
  • It also covers online and mobile advertising and advertisements in internet websites, out-of-home media, on film screen in theaters, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc
  • Advertisements of various products displayed in the movies at a consideration falls within the scope of advertisement. Mukta Arts Ltd. vs. Commissioner 2006 (3) STR 226 (Trib.-Mum.)
  • “Advertisement” means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.
  • The Supreme Court in ICICI Bank vs. Municipal Corporation of Greater Bombay held that whether particular action is an advertisement or not would depend on whether the person wants to promote his product or service. If by any communication, the communicator tries to influence the people to buy his product or service or attract towards his product or service, then it would be a guiding factor to identify whether a particular communication of the communicator tantamount to be an advertisement.
  • “Advertisement” includes sale of telecast rights, permitting sponsors for putting up advertisements in stadiums and allowing logos on the clothing and clothing accessories
  • Hiring or sub-letting of site or unipoles to advertising agencies for the purpose of permitting them (advertising agencies) to display their advertisement and raising bills for realization of rental charges does not amount to providing advertising services.
  • Time slot sale by the broadcasting agency is not taxable under this category, e.g., sale of time slot by Star TV to the producer of the programme. However, if the producer sells the allotted time slot to any other person to advertise his or her goods or services, then that is subjected to GST under this category
  • Production of TV Serials : Where the appellant is a ‘Serial Recording & Advertising Co.’ and his activity is only for producing T.V. serials and are not carrying out activities of advertising agency and the balance sheet also discloses the similar facts, tax cannot be levied on the assumption that they are carrying out activities of advertising agency.
  • Mere painting on the wall by the painter does not fall in the definition of “Advertisement”.
  • If a person provides a composite supply of providing space for advertisement coupled with taxable supply relating to design and preparation of the advertisement, the activity will be considered either as composite supply or as mixed supply; and the taxability will be determined in accordance with sec 8 of the GST Act
  • Selling of space for advertisement in print media was exempt under service tax but now it is taxable @ 5% under GST. Thus, all NGOs publishing souvenirs, receiving advert. for souvenirs would now be a taxable supply.

Place of supply of Advertisement service

Place of supply u/s 12 (Both parties are in India) Section 12(2) of IGST Act: (*)

(a) If made to a registered person, POS shall be the location of such person;

(b) If made to any person other than a registered person, POS shall be,––

(i)  the location of the recipient where the address on record exists; and

(ii)  the location of the supplier of services in other cases.

Place of supply u/s 13 (One party is outside India) Sec 12(3) of IGST Act: Location of recipient of services. However, where location of recipient is not available in the ordinary course of business, POS shall be location of supplier of services.

Place of supply of Advertisement service to Govt.

(*)   Sec 12(14) of the IGST Act – The place of supply of advertisement services to the Central Govt, a State Govt, a statutory body or a local authority meant for the States or UT identified in the contract or agreement shall be taken as being in each of such States or UT and the value of such supplies specific to each State or UT shall be in proportion to the amount attributable to services provided by way of dissemination in the respective States or UT as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

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