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How to claim ITC in This Case???

24 January 2021

selling of news paper is exempt from tax but advertisement charges is taxable of 5% in this case shall I claim full ITC of purchase of paper and other service charges ???

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CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 24 January 2021

Space selling for advertisement in print media will attract 18 per cent GST if an agency does so as an agent of a newspaper on a commission basis, the government said today.

GST of 5 per cent will be levied if the advertisement agency works on principal to principal basis -- buys space from the newspaper and sells such space for advertisement to clients on its own account, a finance ministry statement said.

As an illustration, if a newspaper sells a unit of space worth Rs 100 to an advertisement agency for Rs 85 (after a trade discount of Rs 15) and the agency sells the space to client at Rs 100, the newspaper would pay 5 per cent GST on Rs 85 and the advertisement agency a similar amount of tax on Rs 100.

However, if the advertisement agency sells space for advertisement as an agent of the newspaper on a commission basis, 18 per cent GST would be levied on the sale commission it gets.

The newspaper would have to pay 5 per cent GST on the revenue earned from space selling but can avail of input tax credit for the tax paid by the advertising agency on commission received.