Major broadcasting companies like Sony TV and Star TV have blocked advertisements of different products of FMCG major Hindustan Lever Ltd as advertisers have to shell out an extra 5 per cent service tax, which according to the channels HLL is not complying with. However, HLL says all its deals are inclusive of the charge.
According to HLL’s media buying agency Mindshare, all deals struck by it are inclusive of the service tax.
According to HLL sources, the Indian Society of Advertisers has clarified that service tax is levied on the service provider and therefore it is the broadcasters who are responsible for payment of the service tax.
In order to facilitate broadcasters to meet their billing requirements, ISA has recommended that it would be in order for members of ISA to accept bills from broadcasters, which indicate service tax separately as long as the total rate charged is not higher than agreed rate. HLL and other members of the ISA have followed the recommendations of the ISA on this matter.
The ISA has said that about 13 companies are not reimbursing any additional broadcasting service tax, according to its understanding. The companies named by ISA are Britannia, Coke, HLL, the Godrej Group, Raymonds, Colgate, P&G, Hero Honda, Nestle, ICICI, Marico, Johnson & Johnson and Pepsi.
The Star TV network and Sony TV are adamant on their stand and have pulled off all television advertisements of HLL with effect from Sunday night. This decision came after an Indian Broadcasting Foundation directive that advertisers will have to shell out an extra 5 per cent service tax on the gross amount paid on television spots.
Source: Asian Age