The Karnataka Authority for Advance Ruling ( AAR ) has held that the sale of internet advertising space attracts Goods and Services Tax (GST) at 18%.
The applicant, Myntra Designs Pvt. Ltd. owns an e-commerce portal and is also engaged in the business of selling fashion and lifestyle products through the said portal. The applicant approached the AAR for clarifying the tax liability of its transaction of providing advertisement space to a foreign customer on its web portal.
The applicant submitted that he was only involved in providing space on the web platform to a non-resident foreign company for placing and displaying graphical impressions of the advertisement material for consideration. The applicant submitted that the activity is for a non-resident which is outside India and the consideration is received in foreign exchange, the transaction is export of service in terms of section 2(6) of Integrated Goods and Services Tax Act, 2017. Thus the transaction is not taxable in India and is a zero-rated supply on which no tax is liable to be paid.
The Authority observed that the service provided by the applicant is that of rendering the “sale of internet advertising space (except on commission)” and is charging a fixed rate and not a commission for providing such space, hence the same is classified under SAC 998365 under the heading 9983 which reads “other professional, technical and business services”.
The Coram of Dr. M. P. Ravi Prasad, Member (State) and Mr. T. Kiran Reddy, Member (Central) has held that the service provided by the applicant is exigible to CGST at 9% and SGST at 9% as per Sl. No. 21 of Notification No. 11/2017.
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