Business

Budget 2023 Expectations: Bring GST on digital advertising at par with print advertising from the current 18% to 5%

Advertising is a key catalyst in helping brands communicate effectively, thus catalysing the economy as well

N Chandramouli Last Updated:January 28, 2023 16:09:17 IST

Representational image. News18

Brands that communicate well with their stakeholders have the potential to grow organizations’ revenues, create jobs, and contribute to the overall economy.

Advertising is a key catalyst in helping brands communicate effectively, thus catalysing the economy as well. One could imagine a world without advertising, and it would strip away the charm and enjoyment that accompanies buying a product or service.

Advertising also plays a pivotal role in media revenues, and without advertising, it is difficult to imagine a vibrant and unbiased media, for only a financially independent media can be free.

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Considering the pivotal role that advertising plays in an economy by being a propeller of brands, it is important that the Union Budget 2023, create opportunities for this sector to grow and thrive. COVID-19 was not easy on the industry and four key measures, if included in the Union Budget will propel the industry and, along with it, the other industries that advertising serves.

First Ask- Digital advertising GST:

Digital, app-based, and internet advertising is seeing phenomenal growth in India, and digital media advertising spending is likely to far surpass other mediums before the end of this decade.

Digital products and services spend a considerable amount of money in advertising in digital mediums and in order to propel growth in the digital economy, the GST on digital advertising should be at par with print advertising, bringing it down from the current 18 percent to 5 percent. The Government’s exchequer will most likely be compensated by volume growth over the next two years, especially considering the 5G rollout.

Second ask- MSME tax rebate:

MSMEs are the cornerstone of the Indian economy, and their contribution to the GDP has been nearly 30 percent over the last decade, also contributing nearly 50 percent to India’s exports. Many regional brands which are giants in their own zones, often do not venture into other regions due to limitations of advertising budgets.

With digitalization and global connectivity, MSMEs also have similar opportunities as large organizations do. If MSMEs were given a tax rebate on advertising services, digital, TV, and print, the possibility of MSMEs creating brands increase dramatically, and with the sheer number of MSMEs in the country, the cumulative tax collections will also rise.

Third ask- Digital Infrastructure:

Continuous improvement of quality and reach of digital infrastructure will allow brands to reach further and serve previously underserved markets. Any amount of Budget investments made in this direction is small, as digital infrastructure improvement has multiplier effects on the GDP.

Fourth ask- Smartphone penetration:

India already has nearly half its population on smartphones. Increasing smartphone penetration should be a key priority in the Budget. A smartphone serves as a personal computer, camera, GPS, music player, and communication device all in one. It has become an extension of a person, providing them with instant access to information, communication, and entertainment. It also serves as a means of personal expression and self-expression, with people using it to share their thoughts, feelings, and experiences with others. This too will have a multiplier effect on the economy and concomitantly on advertising services.

The writer is CEO, TRA Research — primary syndicated research organization that publishes TRA’s Brand Trust Report and TRA’s Most Desired Brands Report for the last 11 years. He tweets @ncmoulee. Views expressed are personal

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