Apportionment of IGST credit with respect to Advertisement service when provided to Government
The Central Government vide Notification no.12/2017-Integrated Tax dated. 15th November,2017 has inserted new rule 3 to the IGST Rules, 2017 to determine the value attributable to different States or Union Territories, in the case of supply of advertisement services to the Central Government, State Government, a statutory body or a local authority, in the absence of any contract between the supplier of service and recipient of services.
Value attributable to the dissemination in each State or Union Territory shall be determined in the following manner: –
| Mode of Advertisement | Basis of allocation | |
| (a) | Advertisements on Newspapers and publications | Amount payable for publishing an advertisement in all the editions of newspaper or publications which are published in each State or Union Territory |
| (b) | Advertisements on Printed material like pamphlets, leaflets, diaries, calendars, t-shirt etc. | Amount payable for the distribution of a specific number of such material in each State or UT |
| (c) | (i) Advertisements on Hoardings other than on trains | Amount payable for the hoardings located in each State or UT |
| (ii) Advertisements placed on trains | Ratio of the length of railway track in each State of that train | |
| (d) | (i) Advertisements on back of utility bills of oil and gas companies etc. | Amount payable for the advertisements on bills pertaining to consumers having billing address in such States or Union Territory |
| (ii) Advertisements on railway tickets | Ratio of number of railway stations in each State or Union Territory | |
| (e) | Advertisement over radio stations | Amount payable to such radio station, which by virtue of its name is part of a State or Union Territory |
| (f) | Advertisements on Television channels | Ratio of the viewership of such channel in such State (last week of a given quarter shall be used for calculating viewership for the succeeding quarter |
| (g) | Advertisements at cinema halls | Amount payable to a cinema halls or screens in a State or Union Territory |
| (h) | Advertisements over internet | Ratio of internet subscribers in such State or Union Territory |
| (i) | Advertisements through short messaging service | Ratio of telecommunication subscribers in such State or Union Territory |
Various examples to the above situations have been explained in the Notification which may be referred.
Comment: Please note that IGST Rules had adopted the CGST Rules in its entirety and with the introduction of this rule, value apportionment is being prescribed for purposes of payment of IGST or CGST-SGST as the case may be. As such, this rule appears to affect valuation of CGST-SGST supplies also but without a corresponding change in the CGST Rules.
[ Notification no.12/2017-Integrated Tax dated. 15th November,2017]
Source : Indirect Taxes Committee
The Institute of Chartered Accountants of India
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