Digital Marketing services, Goods and Service Tax, Content marketing, Ebizfiling

How Will GST Affect India’s Digital Marketing Sector?


GST is expected to increase India’s economy and GDP. As a result, the marketing and advertising industries will grow. In general, Goods and Service Tax will lower production, logistical, and tax costs across a range of industries. Businesses will have more money to spend on marketing initiatives. It implies that people will be able to produce innovative campaigns with top-notch content in the future at lower costs. We may expect GST to enhance the digital marketing and content marketing sectors in India.

What is GST (Goods and Service Tax)?

The Goods and Services Tax (GST) is a tax imposed on goods and services. It is an indirect tax that has mostly superseded many other indirect taxes in India, such as VAT, services tax, and excise duty. The Goods and Service Tax Act was passed by Parliament on March 29, 2017, and into effect on July 1, 2017. In India, the Goods and Services Tax (GST) is a multi-stage, destination-based tax that is levied on every value addition. GST (Goods and Services Tax) is a single domestic indirect tax law that applies to the entire country.

What is Digital Marketing?

The promotion of brands via the internet and other digital communication channels is known as digital marketing. A marketing effort is considered to be digital marketing if it uses digital communication. There are various methods to utilize digital marketing strategies to reach your target audience, from social media to SMS messaging.  It is also a low-cost marketing strategy for small enterprises because of its minimal initial expenditures. People may also hire Agencies providing Digital Marketing Services in India to get the best results for their business.

What is the impact of GST on Digital Marketing?

 The major points considered as an impact of GST on Digital marketing are given below-: 


1. An increase in taxation


Digital marketing is primarily a service-based industry. It was included in the ambit of service tax under the past regime. The service tax was a uniform tax imposed by all states, with a standard rate of 12% to 15%. However, under the GST structure, tax rates vary and, like sales tax, are subject to differences in laws and regulations from state to state.


Digital marketing businesses that operate in multiple states and jurisdictions find it challenging to pay taxes as a result of the service tax’s increase from 15% to 18% because they must take into account the various GST slabs in each state, as well as the State GST (SGST) and Integrated GST (IGST) regulations. In terms of maintaining regulations, involves more effort and expense. This means that businesses should raise their prices while reducing other expenses in order to compensate for the 3% rate increase.


The administration is certain that the issues will be resolved gradually and finally, and that in the long run, by repairing the gaps in the tax collection system, they would boost the economy. The introduction of the GST made advertising expenses eligible for the 18% input credit, which helps businesses reduce their losses. As a result, this was a pleasant development for the digital marketing industry.


2. Changes to GST


The 32nd GST council meeting was presided over by the late finance minister Arun Jaitley. The council strongly supported the decision made at the meeting’s conclusion to adopt new regulations for Medium, Small, and Micro Businesses (MSMEs), which aimed to maximize on the expansion of the digital marketing and content marketing sector. About 45% of these businesses have fewer than 10 employees, and 33% have fewer than 30. 78% of these businesses generate less than Rs. 40 lakhs in annual revenue. These businesses meet the requirements to be classified as MSMEs so they can take advantage of the particular rules that have been created to help MSMEs.


3. Increasing the Exemption Limit


The GST exemption level has been increased from 20 lakh to 40 lakh, making it possible for many more businesses to take advantage of tax exemptions and reinvest the money they save in the expansion of their operations and the economy overall. Businesses with lower yearly revenues have long argued that paying taxes leaves them with insufficient revenue, which makes it hard for them to turn a profit. The two slabs are up for choice between the states. In an effort to support startups, Maharashtra and Karnataka, two states that are known as commercial hubs, both chose the Rs. 40 lakh slab, indicating the general direction other states would follow.


4. Influence of the GST and the composition scheme


Companies in the services sector were not previously included in the composition system, which impacts the digital marketing industry. However, recent reforms have integrated the program into the service and mixed supply sectors. If their annual revenue is less than Rs. 50 lakhs, content writers and online content marketing agencies can take advantage of the composition program at a 6% tariff rate. As a result, they get a number of competitive advantages, including the ability to file IT reports only once a year and pay taxes at a lower rate. If digital and content marketing agencies choose to follow the composition system, they will no longer be qualified for an input tax credit and would instead be required to pay tax on their profits. Such businesses should register by completing forms GST CMP-01 and GSTR-4.


Many implementation problems occurred over the first 2-3 months, and while major brands and MNCs were prepared, smaller businesses and companies found the change challenging since they lacked the necessary expertise. These digital and content marketing companies suffered some losses as a result of the time that these brands needed to observe, research, and analyze the trend before switching. Although the service tax increased by 3%, the new method allows for the spending to be recorded as an input credit. Since advertising expenses are expected to decrease, spending on businesses and major brands will likely rise in the Digital Marketing Sector.

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Author: pallavi-dadhich

Pallavi is an ambitious English Literature student with a profound knowledge of content writing. Her SEO skills complement her content writing profile. She has a strong interest in expanding her set of skills by reading and learning. She is eager to experiment with creative writing styles while maintaining strong and informational content.

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