Indian service tax exemption to leave advertisers with surplus funds

NEW DELHI, March 21 (Asia Pulse) – Service tax exemption on advertising on media platforms, excluding TV and radio, could result in availability of up to Rs 1,500 crore (US$297 million) more to advertisers for spending on campaigns, according to industry experts. “Given that marketing budgets of companies always take into account the service tax component, now there will be more money available to be spent on media other than TV and radio (which are not exempt from service tax),” ZenithOptimedia managing partner Navin Khemka said.

According to him, the total annual advertising spend in India is currently estimated at US$5 billion, of which around 45 per cent is spent on television and radio.

“Now if other advertising media (like print, outdoor, digital) are exempt for service tax, around Rs 1,500 crore, which was earlier spent on service tax by marketers will now benefit advertising and media planning companies,” he added.

In the Budget for 2012-13 Finance Minister Pranab Mukherjee announced that “selling of space or time slots for advertisements other than advertisements broadcast by radio or television” will come in negative list and will be exempt from 12 per cent service tax.

“It is a good news for growing sectors like outdoor and digital.