Big broadcasters united on 5% service tax for all ROs

    MUMBAI: What exactly is the situation as far as the contentious 5 per cent service tax on ad billings go?

The general assumption going round appears to be that the broadcasters have had to give way in the face of strong resistance from FMCG behemoth Hindustan Lever (HLL) on the issue. However, all the three big broadcasters Star, Sony Entertainment and Zee TV have been quite clear that this surcharge must be factored into the final tally and billed separately, the details as to how it is to be done being left to negotiation. A lot of confusion has been raised around this due to a report which first appeared on a media website and Sony has "very categorically clarified that from 1 September, every advertiser on its network has been showing the 5 per cent service tax component separately in the release order (RO)."

Currently, the big FMCG companies advertising on the Sony network like HLL, Procter & Gamble and Nestle are all showing the 5 per cent separately in their billing instructions on the ROs, sources say.

And still off air on Sony because they are yet to accede to the demand on separate billing for service tax and led by Colgate are Coke, Pepsi, Marico and Johnson & Johnson.

Star India ad sales head Raj Nayak said as much when he spoke to yesterday: "All clients have agreed to pay (the service tax) and will be on air as soon as we can put them on." Referring to HLL, Nayak said: "Star does not have a signed deal with HLL and will negotiate with them to pay service tax when a new deal is done. We stand firm that we will follow the IBF-ISA-3AAAs-of-I agreement to air only spots of clients who pay service tax."

Star's old agreement with HLL has expired and negotiations are currently on with it for a new deal.

HLL's annual TV ad spend is streets ahead of any other advertiser at Rs 1.5 billion. On Star TV alone that works out to Rs 2 million every day, reports have said.

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