Selling of Space for advertisement in print media
Query has been raised before this Ministry regarding GST applicable on selling of space for advertisement in print media.
1. Selling of space for advertisement in print media is leviable to GST @ 5%. If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @5% on the full amount charged by
advertisement agency from the client.
Example: If newspapers sells a unit of space worth Rs. 100 to advertisement agency for Rs. 85 (after trade discount of Rs. 15), the advertisement agency sells the same unit of space to client at Rs. 100, newspaper will be liable to pay GST on Rs. 85 @5% and the advertisement agency will be liable to pay GST on full value of Rs. 100 @ 5% and may utilise the ITC of newspaper bills.
2. On the other hand, if the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay GST@ 18% on the sale commission it receives from the Newspaper. ITC of GST paid on such sale commission would be available to Newspaper.
Example: Advertisement agency sell the space to the client not on its own account but on account of newspaper for Rs. 100 and receives commission from the newspapers of Rs. 15 for such sale. In this case, advertisement agency will be liable to pay GST @ 18% on its commission amount of Rs. 15 and newspapers will be liable to pay GST @ 5% on Rs. 100 and may take the ITC of advertising agency’s bill. In this case, newspaper will raise bill to client and advertisement agency will raise the bill to newspaper for its commission.
3. However, if the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%. If such supplies are part of any composite supply, the rate applicable for the principal supply
shall apply.
4. Therefore, everything depends on the terms of the contract between the newspaper, advertisement agency and the client.
“Source: CBEC Press release dated 23.08.17”