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Media agencies not liable for TDS on advertisement payments: Tax Board
March, 09th 2016

Central Board of Direct Taxes (CBDT) has examined the issue of applicability of TDS provisions on payments made by TV channels or media houses publishing newspapers or magazines to advertising agencies
Payments made by TV channels or newspaper companies to agencies for procuring advertisements will not attract tax deducted at source (TDS), the tax department has said.

The Central Board of Direct Taxes (CBDT) has examined the issue of applicability of TDS provisions on payments made by TV channels or media houses publishing newspapers or magazines to advertising agencies for procuring and canvassing for advertisements.

The body said it received various representations as to whether fees/charges taken or retained by advertising companies from media companies for canvasing/booking advertisements (typically 15% of the billing) is to be treated as commission or discount.

"It is hereby clarified that no TDS is attracted on payments made by television channels/newspaper companies to the advertising agency for booking or procuring of or canvassing for advertisements," CBDT said in a circular.

In another circular, the CBDT also clarified norms for TDS payments by broadcasters or TV channels to production houses for production of content or programme for telecasting.

It said disputes have arisen on the issue as to whether payments made by broadcaster/telecaster to production houses for production of a content/programme are payments under a 'work contract' or a contract for 'professional or technical services' are therefore liable to TDS.

CBDT clarified that while applying the relevant provision of TDS on a contract for content production, a distinction is required to be made between -- payment for production of content as per the specifications of the broadcaster and payment for acquisition of broadcasting/telecasting rights of the content already produced by the production house.

In the first situation where the content is produced as per the specifications provided by the broadcaster and the copyright of the content also gets transferred to the broadcaster, CBDT said it is 'work contract' and are liable for TDS.

However, in a case where the broadcaster acquired only the broadcasting rights of the content already produced by the production house, there is no contract for 'carrying out any work' and therefore not liable for TDS, CBDT said.

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