Association of Indian Magazines seeks tax holiday for three years

The Association of Indian Magazines (AIM) has urged the Finance Ministry to consider a general tax holiday for three years for magazine publishers in India.  In its pre-budget memorandum submitted to the ministry, the AIM has requested the government to enable “an equitable playing field for magazines on par with newspapers in India.”

The pandemic has had a debilitating impact on publishing, which was as it is reeling under a lot of pressures  because of shift to digital and social media.

The imposition of 10% customs duty on imported paper used by newspapers and magazines, in the Union Budget 2019, is highly unfortunate, said AIM. “As the industry had been managing one crisis to another every year, this  duty further imposed a very heavy cost. While we are thankful that in the previous 2020 budget this duty was rolled back to 5%, it still imposes considerable costs on a crucial sector that is already in heavy losses,” it said.

A comparison of average cover prices of leading news weeklies and newspapers in the United States, Europe, and even emerging economies show that magazines to newspapers price per copy is a multiple of two or three.  But in India, this multiple is as high as 12. As a result, magazines in India are far more expensive than newspapers, said the AIM.  

“Historically, successive governments have built in various policy measures to allow a free, vibrant, and economically viable print media. However, as magazine publishers, we feel that we don’t have a level playing  field in many cases, government advertising being the biggest area. Even in case of custom duty on imported paper, there is a differential treatment as there is higher duty on  Light Weight Coated (LWC) paper, which is the primary input material for magazines, as compared to  Standard Newsprint, which is used by dailies,” said AIM.

Even under the PRB act, magazines come under the definition of ‘Newspapers’.  Yet magazines have been receiving differential treatment with respect to government advertising, GST on paper, and general policy-making, said the association.

The key points of the memorandum are:

Government ads in magazines

Given that as per IRS 2019, the total reach of magazines at 8.7 crores, is about 20% the total reach of Newspapers at 42.5 crores, DAVP should mandate that 15%–20% of the total DAVP ad spend be spent on the magazine industry. At present it is not even 1%. This should also apply to all budgets allocated by the all-government ministries and departments, in both central and state governments.

Input Tax Credit

It was requested that for the purpose of GST, the government allow full Input Tax credit for both newspapers and magazines. Currently, publishers can only claim proportionate credit as circulation sale revenue is exempted, while advertising attracts 5%. Since newspapers and magazines are single products, it will be more equitable if the entire input tax is allowed for publishing of that single product. This will also be in line with Governments’ stated mission of minimising tax on information and knowledge.

Customs Duty on Paper

There is 5% Customs Duty on imported paper used by newspapers and magazines. Domestic production of Standard Newsprint (SNP) is inadequate to meet the demand and Glazed Newsprint (GNP) and Light Weight Coated Paper (LWC) are not being manufactured indigenously at all. Therefore it was requested that these duties be completely withdrawn.

GST of 12% on Light Weighted Coated (LWC) paper up to 70 GSM.

At present, there is 5% GST on Standard Newsprint (SNP) and Glazed Newsprint (GNP), while 12% on Light Weight Coated paper (LWC). Magazine industry is largely using LWC while newspapers use SNP and GNP. Therefore in the interest of equity, it was requested that GST on LWC be withdrawn, or bring it at par with 5%. 

Exemption of GST on the Cover Paper 

Magazine covers are printed on a thicker paper so that magazines can be preserved for a longer period. AIM requests GST be exempt on thicker cover paper, on Actual User basis with RNI numbers, or at least GST be brought down to 5% on par with SNP and GNP. 

Clarity of Levying GST on Digital Magazines 

Newspapers, Magazines are exempted from GST under tariff item 4902. During the lockdown in Covid Pandemic when physical delivery of magazines were stopped, digital magazines were made available to readers. Therefore AIM requested that the government give a clarity on this that magazines/newspapers in print as well as on digital platforms will be exempted from GST. 

Tax Holiday 

Given the extremely adverse circumstances, AIM has urged the Finance Ministry to consider a general tax holiday for three years