GST impact: Media businesses in training mode as D-Day arrives

Nearly Rs 20,000 crore adex is likely to receive a massive boost under GST

e4m by exchange4media Staff
Updated: Jul 1, 2017 7:53 AM

The mantra across businesses this season is GST training. Across the industry companies are gearing up to brace for impact as GST comes into force today on Saturday, July 1. A large part of this is internal training and education programmes for employees on GST.

Seamless implementation of GST will require coordination across levels and changes internally. Speaking to exchange4media about the implementation process, Joy Chakraborthy, President – Revenue, TV18 & CEO Forbes India, said, “To gear up we are educating our teams across levels and functions on implications and the caution that one needs to observe with regard to new the system. We are also equipping ourselves and teams to interact with client, agency, etc. Internal systems are being prepped for GST led compatibility. Though I feel the industry at large will gain better clarity as we actually get into it deeper.”

Despite the short notice, the industry has started understanding the key areas of impact on their business and initiated alignment of IT systems accordingly. Setting up new systems and transitioning to the new regime is heavily dependent on the IT systems. “In case the IT systems of the companies are not geared up to tackle the compliances and reporting under GST, there would be disruption to the day-to-day business. Major stakeholders in Media Industry, whether Broadcasters, big Agencies or big MSOs/DTH Platforms would be ready for implementation of GST effective July’17 to a large extent, however we see challenges for the others who have not invested enough time and effort to be ready effective July 2017. This would result in teething issues initially, which are expected to be fully addressed by September 2017,” said MK Anand, CEO, Times Television Network. He said that stakeholders who are not fully ready for implementation, would need lot of hand holding/guidance for a quick turnaround.

Even as it becomes evident that advertisers in certain industries may need spend more on advertising, the complete understanding of the implications of GST will trickle in slowly. Udit Bhambri, Business Director, VML, noted that the advertising industry is taking a wait and watch approach to GST. “While there might be some teething problems initially, in the longer run it will lead to more transparency and a better economy, leading to gains overall,” he said.

Anita Nayyar, CEO, Havas Media Group said that cash flow from the clients’ will have to go up by 3%, which is a lot, depending on the size of the client but the actual spends may not increase right away because budgets have been frozen for the year already. “The situation is going to be very much like when service tax was levied. And one will feel the pinch of the 3% for sure because clients are not going to increase budgets mid-term. Be it January to December or March to April, advertising budgets are frozen and therefore budgets cannot be adjusted to make room for the extra 3%.” She added that the industry will have a better understanding of the act in three-four months.

Industry experts also feel that the implementation of GST is more of a wait-and-watch game than an overnight reform. Shreyams Kumar, Jt MD, Mathrubhumi, said that he hopes this bold move will bring uniformity across business in media sector. “However, its impact on the overall print industry will be neutral. We are in process of getting our systems in place internally. The effects of the so-called game changer will be best known after it is put to practise,” he said.

Noting that the price of newsprint has gone up due to GST Varghese Chandy, VP-Marketing, Malayala Manorama, said, “There will be some uncertainty in the initial days. We'll have to wait and see how it settles. Businesses will get back to normal later on.”

The overall impact of the GST regime on the advertising industry is expected to be positive. As reported earlier on exchange4media, nearly Rs 20,000 crore adex is likely to receive a massive boost under GST. The industries that are likely to increase their spends are FMCG, automobiles and consumer durables as they will benefit from GST taxation.


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