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The ban on airing of commercials by few key broadcasters is over for now, as television channels and advertising agencies reached a consensus on billing late Thursday night.
Representatives of the Indian Broadcasting Foundation (IBF) and the Advertising Agencies Association of India (AAAI), after a marathon meeting, arrived at an agreement which they said met the needs of the broadcasters, while assuring advertising agencies of their legitimate earnings by ensuring that ads were back on air from Friday.
While AAAI held that the tax demands made on broadcasters “are bad in law”, it said it was committed and would attempt to get “a circular from CBDT that clarifies that broadcasters like other media are not required to deduct TDS from agency commission since broadcasters do not pay the agency commission”. The ad body is expecting to get such a circular by the end of this month.
Earlier, broadcasters who were facing tax liabilities because of non-deduction of tax at source on agency commission, had stopped airing ads unless the agencies accepted net bills.
In a statement, Arvind Sharma, President, AAAI, said, “Advertisers’ spots will be back on air starting today. We ensured that both broadcasters’ and agencies’ business interests are protected. We are happy that the solution we have found will meet the needs of our member agencies in terms of their transactions with their clients.”
A statement issued by IBF Secretary General, Shailesh Shah, said, “Leadership from both AAAI and IBF, along with help from their CFOs and tax experts arrived at a way forward that aligns with what is correct and makes life easier for all concerned. After much ado, advertisements are back, net billing is established and advertisers are happy to see their products and services back on television.”
He said broadcasters had stopped carrying advertisements on their channels as they did not see agencies realising the seriousness of the issue at hand. “Broadcasters have been asked to pay taxes on a practice imposed on them by media buying agencies. The amount in question does not get transacted between broadcasters and agencies, and accordingly, should not result in tax implications for broadcasters. On the same principle, this non-transacted amount should not appear as such on broadcaster-invoices either,” the statement said.
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