The Finance Minister Arun Jaitley has proposed to reintroduce service tax on online and mobile advertisements in a move that has evoked mixed reactions from industry players. Two years ago, such advertisements were put under the so-called negative list that specifies services under which no tax was payable. Zafar Rais, CEO, MindShift Interactive, said that digital, web and social media agencies would be negatively impacted if the proposal gets implemented. Synopsis:Amidst global and domestic headwinds, Finance Minister Arun Jaitley presented a growth and development-oriented Budget that seeks to transform india for the benefit of farmers and the vulnerable. Thin volumes when #FMJaitley started #Budget2016 speech; now widespread selling in second hour. Accelerated depreciation to be limited to 40 per cent wef from April 1, 2017 as part of phasing out of exemptions to industry.
Bank recap allocation along expected lines, will prove insufficient and only hints at going below 50% stake in PSU banks. Increase crop yield in rain fed areas, 55 per cent of arable land, organic farming promoted. Though technically this is Jaitleya€™s third Budget, it is being seen as the first real one of the Modi government, and is expected to take forward the BJPa€™s agenda of development and growth. The Sensex and the Nifty were marginally down ahead of the Budget presentation on reduced bets by cautious retail investors amid continued capital outflows by foreign funds. Gainers: Ahead of the Budget, SBI, Tata Steel, ICICI Bank, ONGC and Dr Reddy's were trading higher by 1-3 per cent on the BSE.
Rupee weakens Ahead of the Budget presentation, the rupee was trading lower by 12 paise to quote at 68.74 against the dollar in early trade at the Interbank Foreign Exchange (forex) market today on month-end demand for the American currency from importers and banks. 90% of our readers say the Finance Minister should loosen up the purse strings and spend to push growth. The Union Budget to be presented on Monday may not go the whole hog on the income-tax law simplification front. What to look for Intense lobbying precedes Union Budgets as all sections of the society jostle with each other to make their voices heard by the Finance Minister.
The Indian Railways is reviewing the tariff structure for its freight business and wants to expand the basket of commodities it transports to boost revenues, the Railways Minister said on Thursday. Railway Board to be reorganised on commercial lines Drones to be used for remote monitoring physical monitoring of ongoing projects Indian Railways earns only 5% non-rail based revenue.
2 dedicated freight corridors being developed Happy to announce action has been initiated on 139 Budget announcements last year.
We are facing two headwinds: tepid growth of our economya€™s core sectors, increased productivity bonus payouts. Rail Budget hs been prepared keeping in view aspirations, needs and concerns of people the of nation: Railways Minister Suresh Prabhu.
An unreserved train ticket for travelling up to 199 km distance will no longer be valid after three hours of purchase of the ticket as railways has formulated a new rule to be effective from March 1. In November 2015 the Railways had doubled ticket cancellation charges and proposed changes in refund rules.
Internet and mobile advertising till now was included in the negative list that specified the services on which no tax was payable. Equalization levy, which is a new tax introduced in the Union Budget 2016-17 on companies which advertise on online and digital platforms abroad, could be imposed on certain online IT services, as per a committee report on taxation of e-commerce. As a measure to mitigate the disadvantage of a domestic service provider, the new tax would be imposed on the entire payment made to a service provider overseas, said the report which was disclosed on Monday, as reported by report in Financial Chronicle.
The committee report headed by the senior official of the central board of direct taxes (CBDT) was presented to finance minister Arun Jaitley before the Union Budget  2016-17. The tax on online advertising in the new fiscal has been proposed at 6 per cent in this year’s Budget. The set of IT services which have been proposed to bring under this tax entail designing, creating, hosting or maintenance of websites, digital space for website, e-mails, online computing, and the likes. However, the equalization levy net would not encompass services like downloading music, books etc from sites based out of India, since the report has restrained the tax jurisdiction to offshore companies which contact Indian firms instead of consumers directly, added the report. Subscribe to our newsletter.Vidhi ChoudharyInternet and Mobile Association of India has opposed the governmenta€™s move. New Delhi: Finance minister Arun Jaitley on Thursday proposed to levy a service tax on online and mobile ads, attempting to broaden the tax base, as he unveiled the maiden budget of the National Democratic Alliance (NDA) government.
Such advertisements have until now been part of a so-called negative list that specified the services on which no tax was payable.
However, the sale of space for advertisements in the print media would remain excluded from service tax. Subscribe to our newsletter.Bibhudatta PradhanFailure to pass a goods and service taxa€”one of Indiaa€™s biggest reforms since the 1990sa€”would put his April 2016 deadline in jeopardy.
Barring some last-minute heroics, the parliamentary session scheduled to end on Thursday will be the least productive since Modi swept to power in May 2014. The impasse is giving investors another reason to exit India as China’s yuan devaluation roils financial markets ahead of an expected rise in US interest rates.
Opposition law makers shouted and banged on tables on Wednesday to prevent members of Modi’s administration from speaking, forcing the upper house to adjourn before a vote on the goods-and-services tax.
Unless this session is extended on Thursday, Modi has few options to get things back on track.

Modi’s opponents spent most of the Wednesday calling for foreign minister Sushma Swaraj to resign for helping the former chief of Indian premier league (IPL), Lalit Modi, procure British travel papers even though he faces tax evasion allegations. Subscribe to our newsletter.Jayshree P UpadhyayThe current service tax notice on Sebi is for July 2012 to March 2015 and a second service tax notice is likely to be sent, seeking service tax dues for the period from April 2015 to March 2016. The Union Budget exempted regulators such as Sebi, the Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) and Employees’ Provident Fund Organisation (EPFO) from service tax prospectively, with effect from April 2016. A second person added that the demand follows a final assessment of Sebi’s book of accounts. An email sent to Sebi and the Central Board of Excise and Commissions (CBEC) on Tuesday had not elicited a response as of press time. According to a third person familiar with the regulator’s thinking, the Sebi Act and Section 25 of the Finance Act clearly exempt services provided by Sebi from the tax levy.
Section 25 of the Finance Act states that from the date of Sebi’s constitution to the date of establishment, it is not liable to pay wealth tax, income tax or any other tax on wealth, income, profits or gains derived. Sebi provides services to stock exchanges, their members, brokers and investors for processing of initial public offerings, debt issues, mutual funds, new fund offers and other services, including informal guidance to companies. The services provided by Sebi are very similar to the services provided by the Reserve Bank of India (RBI) to primary dealers and bond market participants. However, the service tax regime grants the central bank a specific exemption from this levy by including it in a negative list. Industry players were expecting that the exemption would continue for at least 3-5 years, as is normally the case. Jaitleya€™s third Budget saw enhanced focus on agriculture and rural sectors while having some special measures to boost infrastructure in the country. Jaitleya€™s first Budget was not for the full fiscal, while in the second the government claimed to be correcting legacy issues inherited from the previous regime. 125 crore citizens are going to test me as the Budget will be presented in Parliament," the PM said concluding his monthly radio address 'Mann Ki Baata€™ on Sunday. The FM has been braving suggestions on taglines that could scroll on the bottom of the TV screen whilst he would read the budget provisos.
Worries that the government may overshoot its fiscal consolidation target caused nervousness. Part A is the macroeconomic part of the budget where various schemes are announced, and allocations are made to several sectors. But if you need more information to understand the finer points, you need to go to the official Union Budget website . This is because the Centre-appointed income tax simplification committee headed by Justice RV Easwar is yet to submit its final report, official sources said. Most investors and market watchers would be more preoccupied with reserving their favourite chair and getting chai-naashta ready for the Finance Minstera€™s speech. Based on the wishlists, expectations and media reports, we have put together some pointers that you can look for in the Budget. It is a financial ratio used for large industries to define operating expenses as a percentage of revenue.
Today, while presenting the nation’s budget for 2014, finance minister Arun Jaitley proposed to levy a service tax on online and mobile advertisements in an attempt to broaden the tax base and shore up his tax revenues. Chances are a lot of clients assessing may cut back spends to that extent and take actions accordingly. Mostly, a set of IT services have been highlighted for the new tax imposition, and an equalization levy of 6-8 per cent has been proposed in the same, as mentioned in the report.
The government is also open to stretch this levy to other services, so as to enlarge the new tax’s ambit, as per the report. Additionally, online collection or processing of data related to online users in India, online payment collection, development or maintenance of participative online networks and online software applications and similar others have been proposed to be taxed. One year ago, this medium was at the forefront of the Bharatiya Janata Party’s election campaign. If anything this is a recognition that digital is no longer considered niche,” said Atul Hegde, chief executive officer, Ignitee Digital Solutions Pvt. Till date, service tax was not applicable on sale of ad space for Internet and mobile media. India’s rupee fell to the lowest level since 2013 on Wednesday, weakening along with currencies across emerging markets. His inability to push economic proposals through the opposition-controlled upper house has eroded enthusiasm among investors who saw his victory as a turning point for India. Some reports even suggest Modi will drop key elements of the land bill, a move that would water down its potential impact. His Bharatiya Janata Party (BJP) used similar tactics in parliament to repeatedly block the GST while it was in opposition, leading to an economic downturn that allowed it to defeat Congress in last year’s election. The notice was sent to the capital market regulator in the first week of April, two people familiar with the development said.
The first person quoted above said a second service tax notice will be sent, seeking service tax dues for the period from April 2015 to March 2016.
However, in this case, it seems that the service tax department has clearly identified the services that are liable to a service tax levy,” said Amit Kumar Sarkar, partner at consultancy Grant Thornton India. The concept of a negative list was introduced in 2012; it is a master list of services that are not liable to pay service tax.

Sale of space for advertisements in print media, however, would continue to remain excluded from the service tax ambit. National Dialysis Service Programme with funds through PPP mode to provide dialysis at all district hospitals. So did speculation that the Finance Minister may raise the period of holding of equity instruments to three years to qualify as long-term capital gain. This, for an industry which is still a fledgling one, and is merely about 2900 crores, according to IAMAI (Internet and Mobile Association of India) estimates. Because the goods-and-services tax requires a constitutional amendment, he can’t call a special session before then to push it through. Also, the monthly derivatives expiry on Thursday and the Railway Budget that showed many missed financial targets did not help. However, buying by domestic institutions and reports about an imminent rate cut by RBI helped improve the sentiment battered by the proposal for higher dividend distribution tax on those earning more and a proposal to increase securities transaction tax in some categories. We request the finance minister to withdraw this announcement and bring back online advertisement under the negative list of service tax,” said Shubho Ray, president of Iamai. This is tax on spending, not on income or profit.So here you end up losing money in taxes even if your business has not profited.
With majority of ad budgets for startups allocated towards digital ads, this has a direct impact on spends. An industry that is mature enough, decades old and suspected of having unaccounted money in circulation of its economy.
Why Service Tax?Thinking from the first principles, service tax and VAT are taxes on consumption. Service tax on consumption discourages spending and encourages savings and investment. Also getting refunds for service tax is a pain today, and this new law will add to the problems,” he says. Since they will save the money with a bank account, banks will have more cash reserve to loan out money to businesses. And if businesses get credit, they will invest money and create jobs and help grow the economy.But when businesses spend on services, it is an investment.
In my opinion, service tax on spends should be exempt for all business entities.I invest in online ads and I am not spending it.
First the amount is converted into INR on the existing conversion rates.And then there is a consolidated fee that is charged for all the conversions they made. And there is some more tax on the taxes).Look at this screenshot from my credit card statement!That makes it 4% on the currency conversion fees. But it is still a lot less than 14.5%Facebook Payments in IndiaAs far as I know, Facebook charges for advertising only in USD. Read this article to learn more about payment options in India for Facebook Ads.However, while creating an account, if you see an option to choose INR or USD, choose USD. This change will take effect for all invoices dated on or after November 15, 2015 raised with respect to sale of online advertisement space.Notice that it is Google India Private Limited.
However if you pay in USD, Google India cannot receive the payments and hence there is no service tax.Same goes for hosting and email marketing services as well. If you pay in USD to companies in abroad, there is no service tax.Are You a Publisher?If you are a publisher (blogger, website owner etc) then you have to charge service tax to your buyers (in India) when they are buying ads on your website.
Technically, you are exporting a service (online advertising) and there are no service tax for that.There is no tax for exports because Indian government wants to encourage foreigners to buy from India.
This helps us (India) build foreign currency reserves.As of November 13th, RBI has $352 Billion in foreign currency reserves. This is when all transactions happen within India, which in some cases in unavoidable.Example, if you are a publisher, you spend money on ads and you earn money on ads. You have the charge VAT on your products that goes to the state government, and there is no balancing it out. Consult a financial expert for more advice on it. Eventually, the people who designed such a tax system are incentivizing us to make foreign companies richer and Indian companies and service providers poorer.By now you would have noticed that this post was more of a rant apart from the information provided here.
But I have aquestion, can i convert my adword account from INR to USD???Reply Deepak Kanakaraju November 27, 2015 at 12:16 pmNo.
I see how to save money and it would be wise to have good business relationships with foreignn companies if your want to earn more in India.
I just came to Malaysia for about 2 months on a business trip and it opened my like like a bottle opener. But in general service tax liability is always the burden of the seller, not the buyer.I contacted more than 5 companies who buy services from US, and none of them are paying any service tax on imports. For now, the information in the article is 99% accurate ??Reply Sohel November 27, 2015 at 7:06 pmNice Information for Us.
I’ve not done online ads but I am planning to do so but these taxes refrain me to do so.

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