Industry Experts Disappointed With Service Tax Levied on Online Media and Advertising

Online and mobile publishers and advertising networks have been brought under the service tax net once again this budget.

People belonging to the social media and advertising industry could not hold back their opinions on the 2014 Budget and to be precise, on the 12% service tax to be levied on online media and advertising companies.

Two years from now, the industry was exempted from service tax. Later a year ago, this medium was used by the leading political parties for promoting themselves. The changing take on the social media industry's market standings is putting the people belonging to it, not even confused but feeble. However this has not put a stop to the responses from them. Reactions started pouring in as soon as the Finance Minister Arun Jaitley presented the budget of the Modi Government.

Few are listed below and we will keep updating this list:

“I do not think that the service tax implication will have an adverse impact on digital advertising budgets. Investments in digital advertising were not spurred by the lack of service tax, but rather by brand marketers recognizing the reach and impact online and digital media can potentially deliver. We expect that today’s digital savvy marketers will continue investing in the medium.

The provisions by the government, on the other hand, reflect the exponential growth the sector has experienced over the last two years. It is a sign that online and mobile advertising are now being recognized at par with other media.”

Atul Hegde, CEO, Ignitee Digital

"The recent announcement of levy of service tax on online media and advertising might create a negative impact as most brands and large corporations have already budgeted their online media spends for the year. This would imply that these marketing and advertising budgets would eventually get undercut. Owing to the fact that, online and digital advertising in India is fairly nascent, this move might discourage new entrants to the industry and allocation of spends towards digital marketing. The speedy rate at which the industry was evolving now faces a minor setback.

On the other hand, the budget has positively set aside close to Rs. 500 Cr for the digital India program to ensure connectivity at the grass-root levels. Brands and organizations on digital will now also focus on the rural markets, if they haven't already through the online mediums. Going forward, there will be a paradigm shift in the communication and marketing strategies by digital and technology agencies to specifically target this new audience by including unique and innovative rural marketing campaigns."

Suveer Bajaj, Co-founder, FoxyMoron

"It is an irony while the PM is encouraging his ministers and government to use social media, the finance minister is widening the tax net onto online and mobile ads. It might have a significant impact on brands allocating spends on digital media, possible cutting them now and reallocating to print & visual media."  

Tinu Cherian, Digital Media PR Professional, UST Global

"This move by govt would not create negative or any kind of impact on Digital Media Agencies. In Fact finance minister Arun Jaitley's announcement is an indirect indication of Digital Media Marketing being a mainstream buisness. Movies and Brands will still countinue to spend & now it's a challenge for us to spend it more effectively."

Darshan Shah, CEO & Founder of HazelKnight Media

"I welcome the move from the government to finally consider online and mobile advertising to be at par with other advertising media, even if it took taxation to acknowledge it. Ministries are being brought to speed with social media norms. The Hon. Finance Minister, Mr Arun Jaitley’s sentiment of taking off burden from future generations echoes strongly in every arena, including the world of follows, shares and likes. If you consider the fact that PC prices will also reduce as a result of this budget, the move completes the circle."

Rajneel Kumar, VP & Business Head - Digital Media of Viacom 18

 

“The nation has no choice but to do some heavy lifting in all areas to make up for the lack of progress over the past few years. It would be great, If some of the revenue collected is ploughed back in supporting the digital media industry by way of education, upskilling & other government assistance programs.”

Akash Malik, Founder - Maverick Mav & Apps Mav