Broadcasters pull off ads over billing row
NEW DELHI: Broadcasters
were forced to pull commercial advertisements off the air on Wednesday
following a standoff between them and advertising agencies over billing
practices.
India's TV advertisement industry, pegged at about Rs 13,000 crore, has been in negotiations with the advertising agencies to switch from a 'gross' billing method to a 'net' billing method.
Earlier, broadcasters used to issue gross bills to the agencies for TV commercials and ad spots carried by the channels. These bills included a 15% agency commission, which was later deducted from the gross amount. But in recent assessments the income tax department has taken a view that the trade discount given by broadcasters is actually an agency commission. IT department has issued notices to IBF members for non-payment of tax deducted at source on this 15% agency commission. To avoid unnecessary litigation, Indian Broadcasting Foundation (IBF) has decided to issue net bills starting May 1.
Star India CEO Uday Shankar said, "It is a huge loss for broadcasters on a daily basis. And it is particularly hard for the free-to-air channels that are dependent on advertisements as a source of revenue. But we can't do business that exposes us to a tax default.''
News Broadcasters Association president and NDTV executive vice-chairperson K V L Narayan Rao said that the move has resulted in huge hardship and burden. "Every day is a costly affair. We have to resolve this soon...We cannot take this tax burden,'' he said, adding that advertising agencies were expected to be reasonable on the issue.
However, Advertising Agencies Association of India (AAAI) opposed the move. While numerous meetings have happened between the IBF, the AAAI, and the Indian Society of Advertisers (ISA), they have not reached a solution yet. IBF's Manjit Singh did not respond to calls. Star's Shankar added that advertisers were concerned too but there were some informal talks taking place and hoped that a resolution was in the offing soon.
Times Now CEO Sunil Lulla said that it was up to the advertisement agencies to clarify with the tax authorities. "We have shifted to net billing and running only those advertisements where release orders from agencies have been received on a net basis,'' he said.
India's TV advertisement industry, pegged at about Rs 13,000 crore, has been in negotiations with the advertising agencies to switch from a 'gross' billing method to a 'net' billing method.
Earlier, broadcasters used to issue gross bills to the agencies for TV commercials and ad spots carried by the channels. These bills included a 15% agency commission, which was later deducted from the gross amount. But in recent assessments the income tax department has taken a view that the trade discount given by broadcasters is actually an agency commission. IT department has issued notices to IBF members for non-payment of tax deducted at source on this 15% agency commission. To avoid unnecessary litigation, Indian Broadcasting Foundation (IBF) has decided to issue net bills starting May 1.
Star India CEO Uday Shankar said, "It is a huge loss for broadcasters on a daily basis. And it is particularly hard for the free-to-air channels that are dependent on advertisements as a source of revenue. But we can't do business that exposes us to a tax default.''
News Broadcasters Association president and NDTV executive vice-chairperson K V L Narayan Rao said that the move has resulted in huge hardship and burden. "Every day is a costly affair. We have to resolve this soon...We cannot take this tax burden,'' he said, adding that advertising agencies were expected to be reasonable on the issue.
However, Advertising Agencies Association of India (AAAI) opposed the move. While numerous meetings have happened between the IBF, the AAAI, and the Indian Society of Advertisers (ISA), they have not reached a solution yet. IBF's Manjit Singh did not respond to calls. Star's Shankar added that advertisers were concerned too but there were some informal talks taking place and hoped that a resolution was in the offing soon.
Times Now CEO Sunil Lulla said that it was up to the advertisement agencies to clarify with the tax authorities. "We have shifted to net billing and running only those advertisements where release orders from agencies have been received on a net basis,'' he said.
Arvind Kumar Pathak
PGDM 2nd
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