GST of 18% will apply to the sale of online advertising space: Karnataka AAR
The AAR was consulted by the e-commerce platform Myntra Designs Pvt Ltd in order to determine if selling Lenzing Singapore Pte Ltd advertising space on its website was subject to GST.
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According to the Karnataka bench of the Authority for Advance Ruling, the sale of online advertising space would be subject to an 18% Goods and Services Tax.
The AAR was consulted by the e-commerce platform Myntra Designs Pvt Ltd in order to determine if selling Lenzing Singapore Pte Ltd advertising space on its website was subject to GST.
According to the AAR, Myntra just leases the customer the ad space, and the advertiser (Lenzing) offers the customer advertising services.
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Myntra is offering Lenzing the service of rendering “sale of online advertising space (except on commission)” and is not charging a commission in exchange for giving such space.
As a result, under GST rules, the same will be categorised as “other professional, technical, and business services” and subject to GST at a rate of 18%.
AMRG & Associates Senior Partner Rajat Mohan said, “This ruling would clarify on the scope of sale of space on internet and on the applicable taxes on said transaction for the entire industry.”