The members of Indian Broadcasting Foundation (IBF) has decided that companies which do not bear the cost of the 5 per cent service tax on advertising will not see their ad campaigns on any satellite channel from September 1, 2002.
This decision was taken by the members of the Indian Broadcasting Foundation (IBF) including television companies such as Sony Entertainment Television, Zee Telefilms, Aaj Tak, Star India Ltd etc.
According to the new IBF rule, advertisers will now have to give an undertaking to that effect on the release order for every booking that they make.
It is learnt that even though about 70 per cent of the total advertisers on the TV channels pay up the 5 per cent service tax, several multinationals have been passing the burden onto them.
Meanwhile, the Indian Society of Advertisers, which has top-notch corporates as its members, has also sent a message to all its members to comply.
The government introduced 5 per cent service tax on advertising in the 2001 budget. The tax is charged on the ad spends minus the agency commission. The total television advertising is close to Rs 3,500 crore.