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OOH industry continues to bear burden of inconsistent, arbitrary ad taxes

By Rajiv Raghunath - April 18, 2018

Why must different civic bodies apply different tax norms when the purpose of GST implementation was to bring about uniformity in taxes?

For years now the Indian OOH industry has been at the receiving end of inconsistent outdoor advertising norms that are enforced by different civic authorities across states. The advertising norms too vary widely between the different markets that deeply affect the businesses of those players that operate in more than one state. While the industry is expectantly waiting for uniform outdoor advertising norms to be introduced across markets, the implementation of GST a year ago has only queered the pitch for the OOH players.

Advertisement Tax had been one of the key revenues sources for urban local bodies. With the implementation of GST, the Advertisement Tax was subsumed in GST. So, urban local bodies were no longer authorised to impose Advertisement Tax. Instead, media owners were called upon to pay SGST or IGST, as the case may be.

Yet, there have been instances of most of the urban local bodies unofficially insisting upon the outdoor media concessionaires to pay Advertisement Tax and other types of taxes, whereas there was only one instance of an urban local body having reimbursed the Advertisement Tax to respective media owners following GST implementation.

Take the case of South Delhi Municipal Corporation (SDMC) that refunded the Advertisement Tax that it had received from media owning firms after the DGST Act 2017 came into effect.

The Office of the Special Commissioner – III, Department of Trade and Taxes, Government of NCT of Delhi had informed the Additional Commissioner – Revenue (Advertisement) in an official communicated dated July 15, 2017 that the Delhi Goods and Services Tax Act 2017 was implemented with effect from July 1, 2017 and that with the commencement of the Act, (i)  in the Delhi Municipal Corporations Act, 1957, clause (d) of sub-section (1) of Section 113, Section 142, clause (c ) of Sub-Section 153, the words “or the tax on advertisements” appeared in sub-section (1) of Sector 154 and the Fifth Schedule shall be omitted.

The communication stated that since the services on which Advertisement tax levied by the municipal corporations was now covered under DGST Act 2017, the assessees may likewise be registered under the same Act. 

Pertinent to add that the taxes subsumed under GST, as per the FAQs on GST released by Central Board of Excise & Customs, on March 31, 2017, are:

  • Taxes that were levied and collected by the Centre, that include, Central Excise Duty, Duties of Excise (Medicinal and Toilet Preparations), Additional Duties of Excise (Goods of Special Importance), Additional Duties of Excise (Textile and Textile Products), Additional Duties of Customs (known as CVD), Special Additional Duty of Customs (SAD), Service Tax, Central Surcharges and Cesses as far as they related to supply of goods and services.
  • State taxes that include State VAT, Central Sales Tax, Luxury Tax, Entry Tax, Entertainment and Amusement Tax (except when levied by local bodies), Taxes on Advertisements, Purchase Tax, Taxes on lotteries, betting and gambling, State Surcharge and Cess, so far as they relate to supply of goods and services.

It is clear from the above that taxes like Service Tax and Advertisement Tax are all subsumed under GST.

Why must then different civic bodies apply different tax norms when the purpose of GST implementation was to bring about uniformity in taxes? Across markets, OOH firms are embattled with the lack of transparency with regard to tax demands.

 

 

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