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MUMBAI:
In a major boost to the stand taken by the Indian Broadcasting
Foundation (IBF), representing broadcasters, that from 1 September
no ads will be accepted for TV channels unless a service tax
is also included in the final bill, national broadcaster Doordarshan
has also taken a similar stance.
Industry sources revealed to indiantelevision.com that DD
had issued notices today to advertising agencies in this regard.
It is learnt that the advertisers, through the Advertising
Agencies Association of India (AAAI), will be making a representation
to DD tomorrow to put forth their side of the story.
According
to an industry source, 90 per cent of the clients are already
paying the tax. It is only a few of the really big advertisers
- the likes of Hindustan Lever, Proctor & Gamble, Colgate,
Nestle, Coke, Pepsi, and Marico, etc. who are still continuing
to dispute it. The letter issued by the IBF states that from
1 September onwards, broadcasters will not accept any business
unless the tax is included in the release order (RO).
As
things stand, all the broadcasters are united in their position
that come 1 September, unless the RO specifically states that
the five per cent service tax is additional over and above
the rate of the RO, the broadcasters will not accept it, the
sources say.
The
issue of what happens to the dues pending on the service tax
for deals signed prior to 1 September, which in the case of
the ad biggies goes back over a year in some cases, is still
not clear though.
The
broadcasting industry's consistent stand has been that the
service tax, being indirect in nature, would have to be borne
by the end-user, namely the advertiser. In contrast, the advertising
community's, some "big advertisers" in particular, argument
has been that the extra burden would add to its costs and
have an adverse impact on total advertisement spend by the
industry.
The
IBF had issued letters to advertisers in July through the
AAAI and Advertising Standards Council of India (ASCI) in
this regard.
See related headline:
IBF issues ultimatum to advertisers on service tax
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