Re-imposing Service Tax On Online Ads “Regressive”: IAMAI

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Re-imposing Service Tax On
Online Ads “Regressive”: IAMAI
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The Internet & Mobile Association of India (IAMAI) has termed a proposal to re-impose service tax on online and mobile advertising as "regressive." The industry body, which has Google India and Facebook among its members, said the move might lead to increase in cost and hamper growth of the industry.

IAMAI said the sector was kept under the negative list of service tax two years ago as "a gesture of support to this fledgling industry". But Finance Minister Arun Jaitley has proposed to bring online and mobile advertising under the service tax net.

"Imposition of service tax at this stage will escalate costs and have a negative growth impact on the fledgling industry. While we have been brought under the positive list of service tax, print Media, which is evolved, is kept in the negative list," IAMAI president Subho Ray said.

Keeping in mind Prime Minister Narendra Modi's commitment to the growth of Internet and mobile industry, IAMAI hopes Finance Ministry will take cognizance of the issue and take corrective measures, he added.

Jaitley said it was necessary to trim the negative list and exemptions in order to broaden the tax base in service tax. "Accordingly, negative list has been reviewed and service tax leviable currently, on sale of space or time for advertisements in broadcast media, is being extended to cover such sales on other segments like online and mobile advertising," he added.
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"We would appeal to the finance minister to withdraw the announcement at the earliest," Ray said.