Reduce gst on digital news subscriptions mib to revenue department

Reduce gst on digital news subscriptions mib to revenue department

A brief note annexed to the letter said that a higher tax burden could skew the growth of the online news sector towards the advertising model, which could affect the quality and credibility of the news content.

New Delhi: The ministry of information and broadcasting (MIB), in a letter dated July 22, requested the department of revenue to either exempt digital news subscriptions from goods and services tax (GST) or to reduce it from 18% to 5%.

In the letter, addressed to revenue secretary Sanjay Malhotra, information and broadcasting (I&B) secretary Sanjay Jaju said that newspapers were exempted from GST because the significance of giving ‘correct and factual information’ to Indian citizens was recognised.

A brief note annexed to the letter said that a higher tax burden could skew the growth of the online news sector towards the advertising model, which could affect the quality and credibility of the news content.

‘With the growing internet penetration in India and the nascent stage of the online news industry, it is requested that the disparity between GST on printed newspapers and digital/online news subscriptions may be addressed by either exempting the GST on the latter or rationalizing it from 18% to 5% at par with that on e-books,’ the letter read.

The MIB mentioned a September 29, 2023, office memorandum in which it had recommended exempting online news subscriptions from GST to bring parity between printed newspapers and digital/online news subscriptions. The revenue department, however, in an office memo dated June 5, 2024, said that the proposal to exempt digital news subscriptions was discussed by the GST Council in its meeting on July 11, 2023, but the proposal was not recommended by the Council.

The MIB cited how a similar disparity between printed books and e-books was addressed in 2018 when the GST Council reduced the GST rate on e-books from 18% to 5% through a notification dated July 26, 2018.

The 54th GST Council meeting is scheduled to be held on September 9, and the last meeting was held on June 22.

In the attached background note, the MIB noted that very few internet users in India pay for online news. Thus, a higher rate of GST on digital news subscriptions could encourage the online news sector to adopt an advertising model ‘which may impact the quality and credibility of the news content on the internet through practices such as use of clickbait and sensational headlines, and fake and misleading news, etc.’

It also noted that the 18% GST on online news subscriptions brings a tax revenue of about Rs. 21.6 crore from a total revenue of Rs. 120 crores. The MIB argued that reducing it to nil or five percent ‘may not lead to substantial revenue forgone by the government exchequer.’

Currently, printed newspapers, journals, and periodicals are exempted from the GST. Under the IGST Act, online news subscriptions are taxed at 18% as Online Information Database Access and Retrieval (OIDAR) services, that is, an internet service that has no physical interface between the supplier and recipient of the service.

Online news subscriptions are included in the sub-category of services for ‘supply of images, text, and information and making available of databases.’.

The MIB noted that providing ‘credible and factual information in the nature of news’ is different from other online content services as it ‘empowers the citizens to take informed decisions and be aware of their rights and responsibilities.’