Sale of online space for advertisement to attract 18% GST, says AAR

Sale of advertisement space on internet would be liable to 18 per cent Goods and Services Tax, the Karnataka bench of Authority for Advance Ruling has said.

E-commerce portal Myntra Designs Pvt Ltd had approached the AAR seeking a ruling on whether providing advertisement space on its portal to foreign entity Lenzing Singapore Pte Ltd was liable to GST.

The AAR said Myntra is only leasing the advertisement space to its customer and the advertiser (Lenzing) is providing advertisement services to its customer.

The service provided by Myntra to Lenzing is that of rendering 'sale of internet advertising space (except on commission)' and is charging a fixed rate and not a commission for providing such space.

Hence, the same will be classified under 'other professional, technical and business services' under GST law and is liable to GST at 18 per cent.

AMRG & Associates Senior Partner Rajat Mohan said, This ruling would clarify on the scope of sale of space on internet and on the applicable taxes on said transaction for the entire industry.