GST Compliance for revenue from online advertising

Online earning has become the talk of the trading town, earning from web pages, blogs and earning through google Adsense has gained much importance in virtual world. To obtain understanding of GST on online advertising and majorly its GST compliances for earnings from online advertising, first whether these services constitute supply under GST should be understood.

Earning from a blog constitutes 3 parties

First – Website owners, bloggers, webpage owners
Second – Customers who wants to place their ads on webpages and websites
Third – Google/Facebook/Microsoft who places ads from customers on webpages and websites.

GST On Online Advertising, GST Compliance for revenue from online advertising

Transactions involved

  1. Website owners give permission to google to access space on websites for placing ads without which publishing would be illegal – i.e. creates adsense accounts and givers access and rights to use account for advertisement purpose.

Example: Applying your poetry blog for google adsense by creating adsense account.

  1. Google providing advertising services to customers – provides advertisement on internet which constitutes OIDAR service.

Both these constitute supply and thus attract GST, as here the focus is on GST on online earnings from advertisement, detailed discussion on it taxability, procedural aspects and returns will be discussed herewith.

Procedural Aspects

Registration

If you are earning from blogging and Youtubing you have to register if aggregate turnover exceeds 20 lakhs [1], since blogging is just display of contents and information without charging fee from viewers, blogger may not be called as electronic commerce operator and thus mandatory registration is  not applicable.

SAC codes for these services

Heading no. – 9983 – Other professional, technical and business services
Group number – 99836 – Advertising services and provision of advertising space or time.
SAC code – 998365 – Sale of internet advertising services

 Export of service and filing of LUT

The earning comes by allowing the usage of site for advertising where supplier is blogger and receiver is Google. There are seprate contacts of google with customers and bloggers. Now the question which rises is whether it is export of service?

As Location of supplier – India
Place of supply – location of receiver – Singapore
It export of service as place of supply is outside India and location of supplier is in India

Moreover apart from these 2 conditions the payment should be received in convertible foreign exchange and 2 entities shouldn’t be mere distinct establishments (eg: branch of same company)

Export of services are considered as zero rated supply, for which though tax need not be paid but returns needs to be furnished and registration to be obtained if exceeds threshold limit.

As regards to its refund and taxability it has 2 options

  • The supplier can export under Bond or LUT (Letter of Undertaking) without paying IGST
  • It can pay IGST while making supply and can claim refund of the same.

The Letter of undertaking can be furnished and submitted online through the GST portal in form GST RFD 11, unlike bonds which are required to be submitted manually.A LUT is valid for one financial year and each year a fresh LUT should be furnished.

Filing Of Returns

  • In GSTR-3B returns and GSTR-1 details of all zero rated supply to be furnished.
  • In GSTR-3B details to be furnished under head “Outward taxable supply(zero rated).
  • Under GSTR-1 details of all export supply must be provided under categories of exports.

Due dates –

  • GSTR 1: 10th Of the Succeeding Month
  • GSTR 3B: 20th Of the Succeeding Month

Conclusion

To summarize, if you are earning from blogging, Youtube channel or Facebook page through online advertising via google Adsense then GST on google Adsense and GST on Youtube earning is Zero rated and can be supplied without IGST under LUT option. As zero rated supply comes under taxable supply you will be required to obtain registration if it exceeds the threshold limit.

[1] 10 lakhs in case of special category states except Jammu and Kashmir, Jammu and Kashmir has opted for 20 lakhs threshold.