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TMI BlogClarification in respect of advertising services provided to foreign clients.X X X X Extracts X X X X X X X X Extracts X X X X ..... rding advertising services being provided by Indian advertising companies/agencies to foreign entities, as some of the field formations are considering the place of supply of the said services as within India, thereby denying the export benefits to such advertising companies. 1.2 In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ), hereby clarifies the issues in succeeding paragraphs. 2. Issue in Brief 2.1 A foreign company or firm hires an advertising company/agency in India f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the services being supplied by the advertising company under section 2(93) of CGST Act ? c. Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act ? 3. CLARIFICATION: 3.1 Issue 1 -Whether the advertising company can be considered as an intermediary between the foreign client and the media owners as per section 2(13) of IGST Act ? 3.1.1 As per section 2(13) of IGST Act , read with Circular no. 159/15/2021-GST dated 20.09.2021 , a broker, agent or any other person who arranges or facilitates the main supply of goods or services or both or securities and has not involved himself in the main supply on his own account is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the client to procure and provide certain services. The advertising agency is providing the services to the client on its own account. 3.1.5 In view of above, it is clarified that in the present scenario, the advertising company is involved in the main supply of advertising services, including resale of media space, to the foreign client on principal-to-principal basis as detailed above and does not fulfil the criteria of intermediary under section 2(13) of the IGST Act . Thus, the same cannot be considered as intermediary in such a scenario and accordingly, the place of supply in the instant matter cannot be linked with the location of supplier of services in terms of section 13(8)(b) of the IGST Act . 3.2 Issue-2 Whether the representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecipient under section 2(93) of CGST Act . 3.2.3 Therefore, in view of above, it is clarified that the recipient of the advertising services provided by the advertising company in such cases is the foreign client and not the Indian representative of the foreign client based in India or the target audience of the advertisements, as per section 2(93) of the CGST Act, 2017 . 3.3 Issue-3 Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act ? 3.3.1 The place of supply of performance based services is provided in sub-section (3) of section 13 of IGST Act . The provisions of clause (a) of the said sub-section pertain to the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing services in such cases can neither be determined as per the provision of section 13(3)(a) nor as per the provisions of section 13(3)(b) of IGST Act . 4. Further, it is observed that in the present scenario, the place of supply of the above-mentioned advertising services does not appear to be covered under any other provisions of sub-sections (3) to (13) of Section 13 of the IGST Act . Therefore, in view of foregoing discussion, it appears that the place of supply of the said advertising service being supplied by the advertising company to the foreign clients can only be determined as per the default provision, i.e. sub-section (2) of section 13 of IGST Act , i.e. the place of location of the recipient of the services. Since the recipie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, in such cases, the advertising company is an intermediary in accordance with Section 2(13) of the CGST Act, 2017 , as elucidated in Circular No. 159/15/2021-GST dated 20.09.2021 , in respect of the said services of facilitating the foreign client and accordingly, the place of supply in respect of the said services provided by the advertising company to the foreign client is determinable as per section 13(8)(b) of IGST Act , i.e. the location of the supplier, i.e. the location of the advertising company. 6. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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