GST on online advertisements and impact on website publishers and bloggers

Every website publisher or a blogger makes money online through advertisements or selling E-books or through affiliate marketing.

Goods and services tax or GST has specifically and separately made provisions for E-commerce industry. GST has made compulsory registration for E-commerce operators and online sellers selling goods on these platforms.

GST on adsense and bloggers

As a blogger or website publisher, you make most of revenue from following activities:

  • By displaying online advertisements of client pitched directly or through 3rd parties such as Google adsense and other ad-networks.
  • By selling E-books directly or by listing them on online portals such as Amazon, Flipkart etc.
  • By affiliate marketing, and
  • By sponsored posts or native advertisement.

In this article we will try to address the following questions:

  1. Whether registration under GST is compulsory for online advertisers or for bloggers selling space on their websites?
  2. Whether bloggers displaying ads of third parties through ad-networks such as Google-Adsense have to pay tax under GST?
  3. How GST will impact revenue of bloggers and other website publishers?

Before going to further reading, let us understand the few terms defined under the act that might cover your online business.

Under CGST Act, 2017 and IGST Act, 2017 following 2 terms are defined which covers almost all services provided through internet.

(110) “telecommunication service” means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means;

(17) “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,––

  1. advertising on the internet;
  2. providing cloud services;
  3. provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
  4. providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
  5. online supplies of digital content (movies, television shows, music and the like);
  6. digital data storage; and
  7. online gaming;

(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network;

(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

GST registration for bloggers and website publishers

First point that should be noted is an online seller, selling goods or services through E-commerce operators is required to obtain registration under GST. As a blogger or web-publisher if you are selling any of your product or services through portals such as Amazon, Flipkart etc. then you need to obtain GST registration.

Suppose you are selling E-books through Amazon, then you have to obtain GST registration and file your returns and pay taxes.

Second, if your read the above definition of E-commerce, it cover selling/supply of goods or services through electronic network. This definition again covers every blogger or web-publishers since they provide their service through electronic networks.

Again, E-commerce operator definition also apply to bloggers since they manage their own website.

Basically the definition of E-commerce operator and E-commerce are wide enough to cover everyone who transacts online or operates a website.

At first glance it seems that every blogger or web-publisher needs to register under GST.

You must note that every E-commerce operator or online seller needs to compulsory register under GST. As online information and database access or retrieval services falls under the definition of E-commerce and you operate your website, you have to obtain registration under GST.

Returns and compliance applicable to bloggers and web-publishers under GST

If you have registered under GST, you now must have doubts on different returns or information to be filed every month.

Normally registered person under GST needs to file information of outward supplies/sales, details of inward supplies/purchase, monthly/quarterly returns, annual statement along with audit report (if applicable).

You can read returns to be file under GST for more details on returns and information you must file regardless of your revenue.

Whether GST needs to be paid on direct advertisements, affiliate income and selling of E-books?

Yes, you need to pay GST on advertisement displayed on your website, affiliate income and revenue earned by selling of E-books or other income generating activities.

There is no specific exemption available to bloggers or web-publishers for providing these services. More importantly definition of E-commerce includes every activity performed online.

Blogging is not going to be fun game anymore as far as taxation is concerned. Due to non applicability of minimum limit of Rs. 20 lakhs to E-commerce operators and online sellers, every new blogger or web-publisher must obtain registration to start his venture.

As on the date of writing this article, no specific exemption is available to small E-commerce operators.

Should you pay GST on your income generated from Ad-networks such as Google Adsense, Media.net, buysellads or infolinks income?

Adsense is the favorite ad-network for any publisher. However there are many other ad-networks that bloggers and website publisher use to monetize their properties.

Basically the income generated through these ad-networks is received in foreign currency and are export in nature. However it may be still debatable unless we have some clarification or in future any case law to settle this forever.

Any export or import of services or goods falls under Interstate supplies.

Section 16 of IGST Act, 2017 provides the list of zero rated supplies.

As per section 16(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or .........

This section classifies export of services and goods both under zero rated supply.

So, it seems at this point of time you need not to pay tax on income received from adsense or any other ad-network.

However unless it is specifically specified or settled by a case law, one has to be ready to prove that income from adsense or any other ad-network is export in nature.

Further export of services means the supply of any service when,––

  • the supplier of service is located in India;
  • the recipient of service is located outside India;
  • the place of supply of service is outside India;
  • the payment for such service has been received by the supplier of service in convertible foreign exchange; and
  • the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

Analysing the definition of export of services, a blogger or publisher earning from ad-networks already satisfy all the conditions. Though in my opinion these services falls under the category of exports and these services will be zero rated supplies.

Author
Posted by Pulkit Sharma under GST

A Chartered Accountant by qualification. I am founder of KnowyourGST.com to provide free resources to enable smooth compliance by Tax Payers. You can use GST Invoicing application developed by m...Contact



18 Comments


Kevin George

It is a great article. I am a website publisher and earning more than 10 lakhs per year from Google Adsense by displaying the ads on my website. Currently I am paying service tax of 15% to the Indian Government. After reading your article, I feel no need to pay the service tax. Am I right? I would like to hear from you a clear answer on the new GST scheme. Your advise will be highly appreciated.


Pulkit Sharma

Hi Kevin,
Adsense income was always exempted from service tax and even from GST.
Adsense income is export in nature, and no court has decided it as taxable.
Unless act specifically provides or court settles it, Adsense income was and will be exempted from any indirect tax.


Raj kumar

Why the confusion when OIDAR clearly mentions that income from ads come under service tax.

Also a case ruling is already do e where adsense is clearly stated as advertisement service.

http://www.cbec.gov.in/htdocs-cbec/aar/rulings/st-rulings/st-ruling-30-2k5

For more info regarding gst on adsense see this

http://zentip.blogspot.in/2017/06/adsense-income-under-gst-india.html?m=1


Pulkit Sharma

@Raj Kumar
Confusion is not whether Adsense service comes under OIDAR or not. It of course comes under this considering the wider definition under GST.
Point is whether it is chargeable to tax or not!!!

Whether to consider it as an export of service which is zero rated supply.


Raj kumar

Earning via adsense cannot be totally export of sercice.

Of course some ads are shown outside India too if visitors outside India visit site.

Adsense also has option of displaying income country wise.

Since in India you will have income from all visitors of states together, you need to take GST registration compulaory due to inter state service supply.

Your logic of Google registered in US or Ireland does not serve any purpose here as defined bg CBEC already.

According to your logic Flipkart resellers need not to register for GST because Flipkart is not registered India. Actually its head quarters are in Singapore.

But that is not the case. Every reseller who is earning via Flipkart is compulsorily have to take GST.

Same is the case with Google because consumers are in India. That is the reason why all big sites who are earning greater than 10 lakhs are already paying service tax from long back.

From now onwards every adsense account holder has to pay GST.

This is final.


Pulkit Sharma

@Raj Kumar
Please go through the conditions for zero rated supplies.
Except 3 point which is place of supply, I believe all points are satisfied by adsense earners.
Now going by the section 13(2) of IGST act,

"The place of supply of services except the services specified in sub-sections (3)
to (13) shall be the location of the recipient of services:
Provided that where the location of the recipient of services is not available in the
ordinary course of business, the place of supply shall be the location of the supplier of
services."

So the place of supply will be Ireland in case of adsense. Since Google is the recipient of service. Bloggers or website do not directly provide service to advertisers but to Google.

And again section 13(12)

(12) The place of supply of online information and database access or retrieval services
shall be the location of the recipient of services.
Explanation.––For the purposes of this sub-section, person receiving such services
shall be deemed to be located in the taxable territory, if any two of the following noncontradictory
conditions are satisfied, namely:––
(a) the location of address presented by the recipient of services through internet
is in the taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card
or any other card by which the recipient of services settles payment has been issued
in the taxable territory;
(c) the billing address of the recipient of services is in the taxable territory;
(d) the internet protocol address of the device used by the recipient of services
is in the taxable territory;
(e) the bank of the recipient of services in which the account used for payment
is maintained is in the taxable territory;
(f) the country code of the subscriber identity module card used by the recipient
of services is of taxable territory;
(g) the location of the fixed land line through which the service is received by
the recipient is in the taxable territory.

Neither of these clarify whether adsense to be taxed in India or not.


Pulkit Sharma

By nature the law requires debates and opinions to understand it more clearly.
Adsense so far has not been taxed under service tax for same reason and are continued in current GST regime too.

Adword income is taxable and Google even charge service tax it.


Mahmood faheem

Adsense payments are made in $.
Paying entity is,
Google Asia Pacific Pte. Ltd.
70 Pasir Panjang Road, #03-71,
Mapletree Business City,
Singapore 117371
(pl. see payment details in the adsense a/c.)
None of the conditions mentioned are satisfied in section 13(12) in order to be taxable.
An early clarification on adsense payments by the GST authorities will help the online publishers from going through the ordeal of monthly statements and penalties for not registering.


Blogging - Top Blogs

We want to ask this question on behalf of blogger friends as ET has created this impression that only those with blogging income more than Rs 20 lakh need to register and pay GST:

Do these people need to register?
- a student earning his part time pocket money of say $20 per month from his blog;
- a housewife who posts her recipes and earns a few bucks from some food seller ads;

These people don't have property or electricity bill in their name for registering their premises. Even if they give their parent's/ husband's address, there is risk of taxman telling that the premise was being used for business.

Will such people need to file 37 returns a year!

Are we sure about AdSense whose payments come from Singapore in foreign currency that this is totally exempt from GST and one need not register?

An early reply will help.


Sahil Ali

@raj kumar, you are right at your point of view but we Blogger are giving our ad space someone located outside India and they are using it.
We'll be in 18% category when we have exclusive ad Clint.. Or we are putting banners for someone located in India


Sandeep Jain

My CA is asking for BRC (Bank realization certificate) to prove that it is export. And bank clearly says no when asked to provide BRC.

Any comments? Is BRC necessary?


Rajendra Doshi

@sandeep Jain,
HDFC bank is now providing one certificate known as , CERTIFICATE OF FOREIGN INWARD REMITTANCE, GIVING ALL DETAILS
AND even deducting GST for service provide by the bank to arrange this foreign remittance ,
I think it is more then sufficient .
@Pulkit Sharma,
thanks for this valuable information on GST for adsense user , Adsense is providing country wise information who clikked advertisement, further advertiser is also out of taxable territory and recipient of service that is google is also paying in USD from Singapore , and it is easy to prove that it is export service which earlier was exempted from service tax and now GST ,
one of my friend suggested that although it is zero rated supply one should register and file NIL return please comments ?


Techno Howl

Hey
Can you also suggest how to file Gst returns for adsense income?
It's clear that adsense income is not taxable but we still have to file Gst every month? Right?


Rajendra Doshi

awaiting comments from Pulkit Sharma
please reply
Rajendra


Vijay Mehrotra

i m doing affiliate marketing . my all commission from paypal US, UK ,all services in US /UK ,all client from US/UK .So GST exempt or not and what about GST registration need or not.


Bluewire Post

@Pulkit Sharma

Thanks for the excellent article

I just started by Blog and not generating any revenue. I am just advertising on FB. Do I still need to register for GST?

FB is constantly asking me to provide GSTN?

Would be really grateful if you could clarify.

Thanks


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Adi anadi

I would like to know whether GST is applicable if a person is sending e-books manually through emails, which requires some work to be done by humans. I mean there is no automated service to send the book automatically after the payment is confirmed.


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