DD also issues ultimatum to advertisers on service tax

 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.

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories