Sale of online advertising space to attract 18 percent GST: AAR

Myntra Designs Pvt Ltd addressed the AAR seeking clarification on whether giving advertisement space on its platform to foreign firm Lenzing Singapore Pte Ltd was subject to GST.

The sale of internet advertisement space will be subject to 18% Goods and Services Tax, according to the Karnataka bench of the Authority for Advance Ruling.

Myntra Designs Pvt Ltd, an e-commerce platform, had sought the AAR to determine if giving advertisement space on its web to foreign business Lenzing Singapore Pte Ltd was subject to GST.

According to the AAR, Myntra just leases advertising space to its customers, while the advertiser (Lenzing) provides advertising services to its customers.

Myntra provides Lenzing with the service of sale of online advertising space (except on commission)’ and charges a flat rate rather than a commission for delivering such space.

As a result, it will be categorized as ‘other professional, technical, and business services’ under GST law and would be subject to 18% GST.

“This judgment will define the extent of sale of space on the internet and the related taxes on a said transaction for the whole sector,” stated AMRG & Associates Senior Partner Rajat Mohan.

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