News broadcasters seek GST relief, input tax credit on staff costs

Ahead of the GST Council meeting, television and digital news broadcasters have urged finance minister Nirmala Sitharaman to consider shifting the point of taxation on sale of advertising space to actual receipt of payments, from the current practice of charging the levy at the invoicing stage.

In a letter dated 28 August, Rajat Sharma, president of the News Broadcasters & Digital Association (NBDA), has also urged Sitharaman, who is also the chairperson of the GST Council, to allow input tax credit on certain expenditures, such as the hire of vehicles, food and beverages or outdoor catering, beauty treatments, and insurance coverage for employees. These are is currently restricted under the Central Goods and Services Tax Act, 2017.

According to Sharma, addressing these two concerns in the existing GST regime will help improve the financial health and operational efficiency of the news broadcasting industry.

NBDA has requested that the point of taxation for GST in the case of the TV and digital news broadcasting industry for the sale of advertising space, particularly to government agencies including DAVP (Directorate of Advertising and Visual Publicity), PSUs (public sector undertakings), and state governments, should be shifted from invoicing to the collection and receipt of payments.

Tax liability

“At present, the liability to pay GST on the sale of advertising spaces arises on the date of issuance of the invoice or receipt of advances. The time of supply presents significant challenges, where extended credit periods and payment delays exceeding 120-180 days are common,” the letter said. It added that this creates severe cash flow mismatch where the broadcaster must pay a tax on revenue it has not yet collected. Further, TV and digital news broadcasters may face difficulties in collection if there is a change in government. To bridge this mismatch, they are often forced to borrow funds at higher interest rates.

“At present, there are certain business expenses for which ITC is blocked and not available against the full amount of GST paid,” the letter added. These include GST paid for motor vehicles hired for the pan-India movement of news reporters, insurance policies for employees and so on. Allowing ITC on such expenses will foster a more equitable business environment and support the growth and sustainability of the news broadcasting sector,” the letter said.

The GST Council will meet on 3-4 September to consider the Centre’s proposals to rationalise rates under GST with two main rates of 5% and 18% along with a higher rate of 40% on sin and luxury goods.