GST Implications on Revenue Share Under Adsense Online Advertising Of Google & Other Ad Sites. - GST In India

Tuesday, 17 April 2018

GST Implications on Revenue Share Under Adsense Online Advertising Of Google & Other Ad Sites.



The other type is 'AdSense for Content' where ads are placed on content shared in Google online platforms like Blogger and You Tube and Google share a portion of revenue with the owners of the content. In this article, the GST implications on AdSense revenue shared by Google to website publishers.

In view of the foregoing discussions, AdSense revenue shared by Google to website publishers or content owners will be a supply of service that attracts GST at the rate 18%. However, as the contracting party of Google i.e. Google Asia Pacific Pte Ltd is located in Singapore and the website publishers or content owners are located in India are paid in convertible foreign exchange, the services qualifies as an export and are zero-rated supplies. Thus in the opinion of the paper writers, no GST is required to be paid on share of AdSense revenue by Google.

As a blogger or website publisher, you make most of revenue from following activities:

By displaying online advertisements of client pitched directly or through 3rd parties such as Google adsense and other ad-networks.
By selling E-books directly or by listing them on online portals such as Amazon, Flipkart etc.
By affiliate marketing, and
By sponsored posts or native advertisement.
In this article we will try to address the following questions:

However, it is worth to examine Section 16 of the IGST Act, 2017 which provides that certain supply of goods or services are to be treated as Zero-rated supplies (no need to pay any GST). The said section is reproduced as under—

“16. (1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––

Whether registration under GST is compulsory for online advertisers or for bloggers selling space on their websites?
Whether bloggers displaying ads of third parties through ad-networks such as Google-Adsense have to pay tax under GST?
How GST will impact revenue of bloggers and other website publishers?
Before going to further reading, let us understand the few terms defined under the act that might cover your online business.

Under CGST Act, 2017 and IGST Act, 2017 following 2 terms are defined which covers almost all services provided through internet.

(110) “telecommunication service” means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means;

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made there under.”

In terms of sub-section (1) of the said section, exports of goods or services are treated as zero-rated. The term ‘Export of Service’ is defined under section 2(6) of the IGST Act, 2017 which is reproduced as under—

“export of services” means the supply of any service when,––


the supplier of service is located in India;
the recipient of service is located outside India;
the place of supply of service is outside India;
the payment for such service has been received by the supplier of service in convertible foreign exchange; and
the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8”
In terms of the above definition, a service is said to be exported if the supplier of service is located in India and recipient is located outside India and payment has been received in convertible foreign exchange. In the instant case, the recipient of service Google Asia Pacific Pte Ltd, is located in Singapore and therefore, the service qualifies as an export of service. Accordingly, the supply of services by website publishers or the content owners

Will GST be paid on Google Adsense Income?
Friends, in the last article, I told bloggers about giving 18% GST. Many bloggers are making income from AdSense, so they are thinking that there should not be a registrar for GST. Apart from this, bloggers with affiliate marketing are also slightly confused. Let’s talk solidly about this in less words.

When to give GST on Adsense Income?
If you create an Adsense account, you will have the option of taking the payment in rupees and your account comes with the money coming from Google Adsense. Not converting to the dollar, you have to give 18% GST in rupees.

Even if you do not get your income earning once a year, you will have to pay a total of 72 GST return in 12 months.

But one thing is clear, those whose accounts are converted into income dollars and converted to Rupees, they do not have to panic, they will get exemption from the Export of Services rules. Even if he had a money up to only 20 lakhs, then 18% GST would have to be given.