MAM

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

http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/smartcrop_800x800/public/images/tv-images/2017/05/03/IBF.jpg?itok=0scZtmZP

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/2017/10/19/sameer.jpg?itok=g3rkv6bm
Barbeque Nation campaign promotes family dining during Diwali

NEW DELHI: Casual dining restaurant chains Barbeque Nation has launched a promotional campaign Tyohar Ek Roop Anek urging people to indulge in family dining at the restaurant this Diwali. The campaign was conceptualised considering the excitement and bustle during Diwali and the need to unwind and...

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/martin.jpg?itok=hVtBf-Iz
Martin Sorrell bullish on India

WPP chief executive officer Martin Sorrell is bullish about India’s economy. He believes the GST switchover pangs and demonetisation were only temporary hiccups.

MAM Media and Advertising People
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/cartlane.jpg?itok=O-jhfRel
Lowe Lintas adds sparkle to Caratlane’s #GetDiwaliReady

During Diwali, online or retail brands in any category be it apparels or malls or real estate or automobiles and even jewellery are vying for attention saying ‘buy me’ by offering discounts and cashbacks.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/jitendra_0.jpg?itok=H6TjyqAz
Max's fresh take on contemporary urban lifestyle

Max Fashion recently launched its latest TV commercial. The film has been conceptualised by JWT and leverages the insight that there are endless ways to win your partner back after a tiff.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/Shatrughan_Sinha.jpg?itok=4cPoJebV
Shatrughan stimulates all against counterfeiting and piracy in FICCI ad

MUMBAI: Amidst of festival season this year, the veteran actor and MP, Lok Sabha, Shatrughan Sinha has joined hands with FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) for an awareness campaign against illicit trade. Sinha has released a video...

MAM Marketing MAM
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/HyperCITY_0.jpg?itok=1jXuVdjr
HyperCITY rolls out maiden campaign #HarDilRoshanKaro!

MUMBAI: HyperCITY Retail (India), a hypermarket chain, has launched its new digital campaign, #HarDilRoshanKaro. The DVC captures the ever-evolving positioning of HyperCITY of providing a perfect opportunity to their patrons to be a ‘Super Hostess’, this Diwali.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/Suraj_Nagappa-Shamsuddin_Jasani_0.jpg?itok=G1NezEEv
Isobar ropes in Nagappa as VP - south, strengthens Bangalore team

MUMBAI: Isobar India has appointed Suraj Nagappa as its vice president to head the business for south. He will be based out of the Bangalore office which boasts of a team size of over 70 and with clients like SunTv, Myntra, Wrangler, Duroflex, Air Asia to name a few.

MAM Media and Advertising People
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/Maneka_Sanjay_Gandhi.jpg?itok=Wr8lANRH
Govt launches ad to help end same-gender bias in women

NEW DELHI: An online campaign has been launched by Government to help end gender bias in women against women.

MAM Media and Advertising Ad Campaigns
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2017/10/18/Diwali.jpg?itok=ObcByR2O
Brands pick digital over TV and print for Diwali marketing

MUMBAI: The festival of lights and colours is finally here! Diwali has always been an occasion to reconnect with family and our loved ones but the event is also that time of the year when brands go all out to create presence and market themselves across all channels.

MAM Marketing MAM

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories