{"id":27582,"date":"2024-09-30T20:40:12","date_gmt":"2024-09-30T15:10:12","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=27582"},"modified":"2024-09-30T20:46:11","modified_gmt":"2024-09-30T15:16:11","slug":"gst-on-advertising-service-offered-by-company-to-foreign-co","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/","title":{"rendered":"GST on advertising service offered by Company to foreign Co."},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d19c00c7cc6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d19c00c7cc6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#GST_treatment_on_cross-border_advertising_services_offered_by_Indian_companies_to_foreign_clients\" title=\"GST treatment on cross-border advertising services offered by Indian companies to foreign clients\">GST treatment on cross-border advertising services offered by Indian companies to foreign clients<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Non-Intermediary_Status\" title=\"Non-Intermediary Status:\">Non-Intermediary Status:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Clarification_on_the_Recipient\" title=\"Clarification on the Recipient:\">Clarification on the Recipient:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Place_of_Supply_in_P2P_and_P2A_Arrangements\" title=\"Place of Supply in P2P and P2A Arrangements:\">Place of Supply in P2P and P2A Arrangements:<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#P2P_Principal-to-Principal\" title=\"P2P (Principal-to-Principal):\">P2P (Principal-to-Principal):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#P2A_Principal-to-Agent\" title=\"P2A (Principal-to-Agent):\">P2A (Principal-to-Agent):<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Performance-Based_Services_Classification\" title=\"Performance-Based Services\u00a0Classification:\">Performance-Based Services\u00a0Classification:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Export_of_Services\" title=\"Export of Services:\">Export of Services:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Recipient_of_Services_and_the_Target_Audience\" title=\"Recipient of Services and the Target Audience:\">Recipient of Services and the Target Audience:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Why_This_Clarification_Was_Necessary\" title=\"Why This Clarification Was Necessary:\">Why This Clarification Was Necessary:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#How_the_Advertising_Industry_Operates\" title=\"How the Advertising Industry Operates:\">How the Advertising Industry Operates:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/gst-on-advertising-service-offered-by-company-to-foreign-co\/#Conclusion_%E2%80%93_Implications_on_advertising_services_on_cross-border_advertising_services\" title=\"Conclusion &#8211; Implications on advertising services on\u00a0cross-border advertising services\">Conclusion &#8211; Implications on advertising services on\u00a0cross-border advertising services<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"GST_treatment_on_cross-border_advertising_services_offered_by_Indian_companies_to_foreign_clients\"><\/span><span style=\"color: #000080;\"><strong>GST treatment on cross-border advertising services offered by Indian companies to foreign clients<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Circular No. 230\/24\/2024-GST, dated 10th September 2024, provides significant clarifications on the GST treatment of advertising services offered by Indian companies to foreign clients. This circular addresses important concerns related to the status of intermediaries, place of supply, and classification of such services as exports, which has been a topic of much debate. This circular helps to simplify compliance and eliminate ambiguity for businesses engaged in cross-border advertising services. Here are the key takeaways:<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Non-Intermediary_Status\"><\/span><span style=\"color: #000080;\"><strong>Non-Intermediary Status<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Indian advertising companies providing services to foreign clients are not considered intermediaries.<\/li>\n<li>They are viewed as providing services on their own account, which means they are engaged directly in the advertising services rather than arranging or facilitating services.<\/li>\n<li>This classification ensures that the place of supply is the location of the foreign client, enabling these services to qualify as exports under GST law.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Clarification_on_the_Recipient\"><\/span><span style=\"color: #000080;\"><strong>Clarification on the Recipient<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The foreign client is confirmed as the recipient of the services, not the Indian representatives or the target audience within India where the advertisements may be shown.<\/li>\n<li>This is crucial in determining the place of supply and classifying the transaction as an export.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Place_of_Supply_in_P2P_and_P2A_Arrangements\"><\/span><span style=\"color: #000080;\"><strong>Place of Supply in P2P and P2A Arrangements<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"P2P_Principal-to-Principal\"><\/span><span style=\"color: #000080;\"><strong>P2P (Principal-to-Principal)<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li>In a P2P arrangement, the advertising agency provides comprehensive advertising services, including media planning, content creation, procurement of media space, etc.<\/li>\n<li>The place of supply in P2P arrangements is the location of the recipient (foreign client), as per Section 13(2) of the IGST Act.<\/li>\n<li>This means that the services provided by Indian advertising agencies to foreign clients qualify as exports, provided they meet the other conditions under Section 2(6) of the IGST Act.<\/li>\n<\/ul>\n<\/li>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"P2A_Principal-to-Agent\"><\/span><span style=\"color: #000080;\"><strong>P2A (Principal-to-Agent)<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li>In a P2A arrangement, the advertising agency acts as an intermediary, facilitating media space procurement for the foreign client without offering full advertising services.<\/li>\n<li>In such cases, the agency is classified as an intermediary, and the place of supply is the location of the supplier (India) as per Section 13(8)(b) of the IGST Act.<\/li>\n<li>Therefore, the services provided in P2A arrangements do not qualify for export benefits and are subject to GST in India.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Performance-Based_Services_Classification\"><\/span><span style=\"color: #000080;\"><strong>Performance-Based Services\u00a0<\/strong><strong>Classification<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The services provided by Indian advertising companies are not performance-based as defined under Section 13(3) of the IGST Act.<\/li>\n<li>This distinction is crucial because, under Section 13(3), performance-based services have their place of supply tied to the location where the service is performed. In the case of advertising services, the place of supply is determined by the recipient\u2019s location, not the place of performance.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Export_of_Services\"><\/span><span style=\"color: #000080;\"><strong>Export of Services<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>As the place of supply is considered outside India, when the foreign client is the recipient, the services meet the conditions of export of services under Section 2(6) of the IGST Act.<\/li>\n<li>This classification makes the services eligible for export benefits under GST, provided all conditions for export are fulfilled, such as receipt of payment in convertible foreign exchange or similar permissible forms.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Recipient_of_Services_and_the_Target_Audience\"><\/span><span style=\"color: #000080;\"><strong>Recipient of Services and the Target Audience<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>CBIC circular clarifies that the foreign client is considered the recipient of advertising services, not the target audience in India.<\/li>\n<li>The recipient is defined as the person liable to pay the consideration under Section 2(93) of the IGST Act.<\/li>\n<li>This distinction ensures that Indian advertising agencies can claim export benefits if the foreign client is the recipient, regardless of whether the advertisement targets an audience within India.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Why_This_Clarification_Was_Necessary\"><\/span><span style=\"color: #000080;\">Why This Clarification Was Necessary:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Prior to this clarification, the advertising industry faced significant challenges in cross-border transactions. Authorities often denied the export of services status to Indian agencies based on misinterpretation of the place of supply and recipient definitions.<\/li>\n<li>In particular, the target audience in India was sometimes incorrectly treated as the recipient of services, leading to denial of export benefits and imposition of GST.<\/li>\n<li>The P2P and P2A distinctions were often confused, resulting in uncertainty over whether advertising agencies acted as principals or intermediaries.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"How_the_Advertising_Industry_Operates\"><\/span><span style=\"color: #000080;\">How the Advertising Industry Operates:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The P2P model involves a full suite of advertising services offered by the agency, with the advertising agency taking on complete responsibility for the campaign, including media procurement, content creation, and planning.<\/li>\n<li>The P2A model, by contrast, involves the agency acting as a facilitator between the foreign client and media owners, without direct involvement in the creative or strategic aspects of the campaign.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Conclusion_%E2%80%93_Implications_on_advertising_services_on_cross-border_advertising_services\"><\/span><span style=\"color: #000080;\">Conclusion &#8211; <\/span><span style=\"color: #000080;\">Implications on <strong>advertising services<\/strong> on\u00a0<\/span><span style=\"color: #000080;\"><strong>cross-border advertising services<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>This clarification brings significant relief to Indian advertising companies by providing clear guidelines on their tax obligations when working with foreign clients. It facilitates the zero-rating of GST for advertising services exported to foreign clients, enhancing the competitiveness of Indian service providers in the global market.<\/li>\n<li>With this clarification, the CBIC has provided the much-needed clarity that will significantly reduce litigation and ease compliance for advertising agencies working with foreign clients. By clarifying the distinction between P2P and P2A arrangements and defining the place of supply and recipient of services, this circular allows advertising agencies to claim export benefits where appropriate and accurately determine their GST liabilities.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>GST treatment on cross-border advertising services offered by Indian companies to foreign clients The Circular No. 230\/24\/2024-GST, dated 10th September 2024, provides significant clarifications on the GST treatment of advertising services offered by Indian companies to foreign clients. This circular addresses important concerns related to the status of intermediaries, place of supply, and classification of &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27582"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=27582"}],"version-history":[{"count":3,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27582\/revisions"}],"predecessor-version":[{"id":27585,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27582\/revisions\/27585"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=27582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=27582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=27582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}