GST @ 18% is levied and TDS @ 2% is deductible on the Google Adwords advertisement expense.
It is important to note here that some publishers are advertising through the Google entity which is registered in India and some advertisers are advertising through Google entity registered outside India. GST @ 18% and TDS @ 2% would be applicable in both the cases irrespective of whether they are advertising through the Google entity located outside India or through the Google entity located in India.
However, for advertisers who are publishing advertisements through Google entity registered outside India, they are at a slight loss as equalisation levy @ 6% (also known as Google Tax) would also be applicable if you are advertising through the Google entity registered outside India. This 6% Equalisation Levy would not be applicable if you are advertising through the Google entity registered in India.
All these 3 have been explained in detail below in this article.
GST on Google Adwords Advertisement
GST on Google Adwords Advertisement is applicable @ 18%. This is applicable irrespective of whether you are registered with the Google entity registered in India or with the Google entity registered outside India.
Advertising with Google entity registered in India
If you are registered with the Google entity registered in India, they will charge GST @ 18% and the same would be mentioned on the invoice. The advertiser can also intimate his GST No. to Google and claim GST Benefit of Input Tax Credit by intimating his GST No. to Google.
Advertisers using the monthly invoicing payment settings can intimate their GST No. to Google through this link – https://support.google.com/google-ads/contact/billing_none
All other advertisers can enter their information by navigating to “Billing & Payments”, then clicking on “Settings” from the menu on the left. In your “Payments Profile”, you’ll see a section called “India Tax”. You can furnish your GST No. here and it will get updated in Google Invoicing Records.
Advertising with Google entity registered outside India
Advertisers who are advertising with Google Adwords registered outside India are also liable to pay GST @ 18%. In this case, Google wont charge 18% GST in the invoice but the advertiser would be himself required to pay 18% GST under the Reverse Charge Mechanism.
TDS @ 2% on Google Adwords Advertisement
Apart from 18% GST which is required to be paid on Google Ads, TDS @ 2% would also be deducted. TDS would only be applicable if the advertiser is required to get his Tax Audit conducted by a CA. Small business are not required to get their Tax Audit conducted and therefore this TDS compliance would not be applicable to small business. (For a detailed guide on who is required to get Tax Audit conducted you may refer this article on Tax Audit).
It is important to note here that GST and TDS are 2 different things. GST is levied as per the GST Acts and TDS is to be deducted as per the Income Tax Act.
Moreover, GST is payable over and above the advertisement charges whereas TDS @ 2% is to be deducted on the payment made to Google.
This can be explained with the help of an example. For eg: You spend Rs. 1,00,000 on Google Adwords. In this case, GST and TDS would be applicable as follows:-
|Google Ad Expense||Rs. 1,00,000|
|(Add)||GST @ 18% (18% of Rs. 1 Lakhs)||Rs. 18,000|
|(Less)||TDS @ 2% (2% of Rs. 1 Lakhs)||Rs. 2,000|
|Balance amount payable||Rs. 1,16,000|
In normal cases, it is this Rs. 1,16,000 only which is to be paid to the publisher. However, in case of Google, it says that you pay Rs. 1,18,000 and once this TDS of Rs. 2,000 has been deposited with the Govt., they will give a credit of this Rs. 2,000.
Deposit of TDS with Govt
The Rs. 2,000 TDS is deducted under Section 194C and is required to be deposited with the govt by the publisher.
When this amount is deposited, the advertiser will also mention the PAN No. and Address of Google Adwords which is as follows:-
|Entity Name:||Google India Pvt Ltd|
|Address:||No. 3, RMZ Infinity, Tower E|
Old Madras Road, 4th and 5th Floor
Bangalore – 560016
After the TDS is deposited and TDS Return is filed, a TDS Certificate in Form 16A would be generated. The advertiser is required to share this Form 16A with Google through email or through Courier.
For advertisers with monthly billing, they shall email a digital copy of this Form 16A to [email protected]
For advertisers with manual or automatic payments, they shall courier the Form 16A along with a covering letter mentioning the 10 digit customer id to the following address:-
Google India Pvt Ltd,
9th Floor, Building 8, Tower C,
DLF Cyber City, DLF Phase 2,
Gurgaon, Haryana – 122002 India
Equalisation Levy @ 6% on Ad Spends on entities registered outside India
The Indian Govt in Financial Year 2016-17 introduced the concept of equalisation levy which is applicable if an Indian advertiser advertises with an entity which is not registered outside India.
The rate of equalisation levy is 6% and is required to be paid only on advertisement expenses incurred outside India.
The most common ad spends outside India are:-
- Facebook Ads
- Linkedin Ads
- Twitter Ads
- Google Ads if enrolled with Google outside India
This equalisation levy was introduced to make these foreign publishers register in India.
As this equalisation levy is only applicable on entities registered outside India, it is better if the advertiser advertises with entities registered in India as they would be able to save this 6% equalisation levy.
For a detailed read on Equalisation Levy, you may refer this article – All about Equalisation Levy in India.