GST rollout: Neutral to no significant impact, say print players
With the rollout of the Goods and Services Tax (GST) regime on July 1, 2017, the print industry will have to pay 5 per cent tax, up from the 3 per cent tax it has been paying. Moreover, advertisements in print media will also come under the purview of GST in the 5 per cent tax slab.
With this, the print industry is bracing to pay more taxes under the new GST regime. As per the FICCI-KPMG Media and Entertainment industry report 2017, print media is projected to continue its growth at 7.3 per cent, which will largely be on the back of continued readership growth in vernacular markets and advertisers’ confidence in the medium, especially in the Tier 2 and 3 cities. Although rising digital content consumption is still perceived to be a long-term risk to the industry.
Speaking on the impact of the new GST regime on the print industry, MV Shreyams Kumar, Joint Managing Director, Mathrubhumi Printing & Publishing Co Ltd, said, “There are two tax implications under the rollout of GST from July 1 on print – newsprint tax rate hike of 5 per cent as opposed to 3 per cent earlier, and print advertisements will be taxed at 5 per cent which are currently free from taxation.”
Pradeep Dwivedi, Chief Executive Officer, Sakal Media Group, explained, “The current aggregate taxes for print companies includes a rate on newsprint at 3 per cent; Advertising was at nil; Circulation was at nil. Under the new GST regime, newsprint (as an input) has come in at 5 per cent rate. While advertising (as an output) is also at 5 per cent. Circulation is continuing at nil. GST for services has also been notified, as enclosed. Selling of space for ads in print media has been notified with a 5 per cent tax bracket. Also, services by way of job work in relation to printing of newspaper have been brought under tax at 5 per cent. Print companies can, therefore, set off the GST on advertising with newsprint. Hence, there isn’t any significant impact.”
Welcoming the constitutional amendment brought in by the Central Government, MV Shreyams Kumar called the introduction of GST a “giant and bold move, which will hopefully bring in uniformity across business in the media sector”. While GST will simplify taxation procedures through standard rates, Kumar felt that its impact on the overall print industry would be neutral. “However, we will wait for the finer details concerning the tax arrangement by the Government, and substantive stand of our local government in its successful implementation. The effects of so-called game changer will be best known after it is put to practice,” he added.
Pradeep Dwivedi, too, is of the opinion that if the overall bearing is positive, it may work to the print industry’s advantage and help in its expansion. At the same time he said that the industry will have to gear up and make its IT and supply chain accounting, as well as advertisement billing accounts GST compliant operationally. “However, this should stabilise in a few months, and won’t have any adverse impact. The larger impact on advertising in general and print advertising specifically is likely to come from the overall impact of GST on all the consumer goods and services that get advertised in the first place,” Dwivedi added.
Along similar lines, Leena Jaisani, Senior Director, FICCI, said that the new GST process is aimed at simplifying the whole tax regime and thereby reducing costs. “However, for the Indian Media & Entertainment industry, the GST transition would not be easy and would result to be complex process due to increase in compliance requirements,” she opined.
Pradeep Dwivedi believes that the new process is a change of rates, but not complex from an accounting or administrative standpoint. On the other hand, MV Shreyams Kumar preferred to wait and watch how the process is carried out and its impact in the long run.