MAM

IBF-AAAI: Net or gross billings? Quo Vadis?

MUMBAI: Come the end of the next advertising billing cycle, an age old practice is likely to come to an end in the Indian broadcasting industry, if TV channels have their way.


Media agencies will start receiving bills net of agency commissions, rather than gross bills (with the 15 per cent agency commission deducted from the gross amount) for TV commercials and ad spots carried by television channels.


The Indian Broadcasting Foundation (IBF) has communicated this to the Advertising Agencies Association of India (AAAI). So what has forced the IBF to attempt to do away with a long standing practice of gross bills?


What happened is that quite a few broadcasters received notices from the income tax department towards end-March 2013 claiming unpaid TDS on the 15 per cent agency commissions that is mentioned in the gross bill amounts that broadcasters normally send to agencies.


"They have asked for retrospective TDS from some broadcasters over the past three years on the 15 per cent agency commission," says IBF president and Multi Screen Media (MSM) CEO Man Jit Singh. "We have not calculated the exact amount of money this would entail, but it is substantial and could cripple the industry and hence we have been advised to move to net billing."


Immediate past president of AAAI and Draftfcb Group chairman India Nagesh Alai says that "this incident cannot be used to rationalise or force any move to net billing. It will adversely impact the advertising industry and hence is not acceptable to AAAI. It‘s a well-established principle under income tax laws that the payer of monies has to deduct TDS. The clients pay the agencies after deducting the TDS and thereafter the agencies pay the media the net amount due to them. Hence, there is no obligation on the media to deduct any TDS from agencies. This is well established by a circular issued by the tax authorities in 1995, when AAAI had sought a clarification. Hence, the notices raised on the broadcasters by the tax authorities on the specious argument that broadcasters have not deducted TDS from agencies, is untenable and not maintainable under law. It has to be argued on merits."


Singh says that broadcasters are broadly in agreement with the AAAI and that they are going to go in appeal against the notices. "We are going to argue our point. But who is going to pay the 50 per cent or so of the claim amount that we will have to deposit with the tax authorities until the appeal is heard and judgment in our favour delivered? Our cash flow position is going to be hit hard."


Alai says that broadcasters "should not be panicking as a result of such wrong claims. As business partners, AAAI and IBF will be working together on this, as always. KPMG and E&Y have been roped in to address the issue on merits."


He adds that "as an aside, it‘s a matter of fact that such tax notices and claims, based on irrational disallowances, invariably emanate in February or March, driven by revenue targets of the tax department."


Singh once again says that he concurs with the AAAI stance "but our tax advisors have said there is no guarantee that even if our appeal is upheld this time, we will not be issued notices from the income tax department again. We can‘t be going in appeal again and again. Hence we are quite firm on our decision to go ahead with the net billings system from the next billing cycle."

Latest Reads

http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/27/Untitled-1_26.jpg?itok=Xk83DILP
Neeraj Roy elected as IAA India chapter president

The India Chapter of International Advertising Association has elected Hungama Digital Media CEO Neeraj Roy as its president.

MAM Media and Advertising People
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/27/Untitled-1_1.jpg?itok=fwyfOMMp
Salman endorses 'fully fantastic' Dixcy

Dixcy Textiles has rolled out its new advertising campaign. The TVC features the biggest entertainer in Bollywood Salman Khan.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/27/Swachh%20Bharat.jpg?itok=TacDOT_p
Swachh Bharat Week: Sachin, Amitabh lead promotional videos

NEW DELHI: A series of promotional videos promoting the idea of constructing toilets in every household in the country was released by the prime minister Narendra Modi. The government is celebrating the Swachh Bharat Week, from September 25- October 2.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/26/Untitled-1_14.jpg?itok=U3BTPEWF
When brands think like publishers: CMS Asia 2016

As more brands are waking up to the perks of content marketing, they increasingly realise the need to think like a content platform or publisher. But, are they doing it right? -- was the question raised in the panel discussion at CMS Asia 2016. The panellists were -- Autocar’s Hormazd Sorabjee, Mxm...

MAM Marketing MAM
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/26/Untitled-1_13.jpg?itok=wW6tfUjZ
Budweiser brings 'What's Brewing' to India

Budweiser's latest campaign ‘Always Brewing' derives its genesis from the brand’s core principles of freedom, authenticity and ambition, and engages with today’s generation- who, like the brand, are infused with the drive of constant progress and perfection.

MAM Marketing Brands
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/27/Nestle.jpg?itok=Yk8kYeJT
Nestlé supports 'Nanhi Kali'; changes packaging

Nestlé India has changed the packaging of its iconic brands, Maggi, Nescafe and Kitkat to support girl child education in association with Nanhi Kali, an NGOs imparting education to underprivileged girl children across India.

MAM Marketing Brands
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/24/Untitled-1_2.jpg?itok=MCFWy-vX
Maxus, Tata Sky shine at Big Bang Awards

The award-winning spree for the GroupM company Maxus continues as it won the Social Media Agency of the year at the Big Bang Awards 2016 (constituted by Advertising Club of Bangalore). Tata Sky was named 'Client of the Year' for its innovative 13-episode TVC campaign called Daily Dillagi.

MAM Media and Advertising AD Agencies
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/24/Untitled-1_0.jpg?itok=rEOZqSB1
Dentsu, Facebook: the problem with digital advertising

The advertising industry just got a hit in an area where it hurts: right in the solar plexus. Last week, Japanese ad agency Dentsu which accounts for a lion’s share of advertising in Japan, admitted that it had overcharged (read: “fleeced”) digital clients to the tune of Yen 230 million between...

MAM Media and Advertising AD Agencies
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/09/24/Untitled-1_1.jpg?itok=VhQYRN3O
Content Vs Market debate dominates: CMS Asia 2016

MUMBAI: Post-lunch panels are always a challenge, but panellists – The 120 Media Collective’s Roopak Saluja, Optimystix Entertainment’s Sanjeev Sharma, GroupM’s Tushar Vyas and Havas Worldwide’s Nirmalya Sen -- at the Content Marketing Summit Asia 2016 were up for it as they discussed if media...

MAM Marketing MAM

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories