MIB urges revenue department to exempt digital news subscriptions from 18% GST or cut rate to 5%

MIB indicated that a higher tax burden might distort the growth of the online news sector, potentially pushing it towards an advertising model.

The Ministry of Information and Broadcasting (MIB) urged the Department of Revenue to either exempt digital news subscriptions from Goods and Services Tax (GST) or reduce the rate from 18% to 5%, as mentioned in a report by Hindustan Times. Addressed to Revenue Secretary Sanjay Malhotra, the letter from Information and Broadcasting Secretary Sanjay Jaju highlighted that newspapers are exempt from GST due to the recognition of the importance of providing "correct and factual information" to Indian citizens.

A brief note attached to the letter indicated that a higher tax burden might distort the growth of the online news sector, potentially pushing it towards an advertising model and impacting the quality and credibility of news content.

“With the growing internet penetration in India and the nascent stage of the online news industry, it is requested that the disparity between GST on printed newspapers and digital/online news subscriptions may be addressed by either exempting the GST on the latter or rationalising it from 18% to 5% at par with that on e-books,” the letter read.

Digital publishers had been seeking this even before Finance Minister Nirmala Sitharaman presented the budget for the fiscal year 2024-25 on July 23.

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The MIB referenced a September 29, 2023, office memorandum that recommended exempting online news subscriptions from GST to achieve parity with printed newspapers. However, the revenue department's office memo dated June 5, 2024, noted that the GST Council discussed this proposal during its meeting on July 11, 2023, but did not endorse it.

The MIB also pointed to how a similar issue was resolved in 2018 when the GST Council reduced the GST rate on e-books from 18% to 5% through a notification dated July 26, 2018.

The 54th GST Council meeting is scheduled for September 9, following the last meeting held on June 22.

In the attached background note, the MIB highlighted that very few internet users in India pay for online news. A higher GST rate on digital news subscriptions could push the online news sector toward an advertising model, potentially affecting the quality and credibility of content through practices such as clickbait, sensational headlines, and fake or misleading news.

The MIB also pointed out that the 18% GST on online news subscriptions generates approximately Rs. 21.6 crore in revenue from a total revenue of Rs. 120 crore. The MIB argued that reducing the GST to either nil or 5% “may not lead to substantial revenue forgone by the government exchequer.”

Currently, printed newspapers, journals, and periodicals are exempt from GST. Under the IGST Act, online news subscriptions are taxed at 18% as Online Information Database Access and Retrieval (OIDAR) services, which are internet services lacking a physical interface between the supplier and the recipient.

Online news subscriptions fall under the category of services for the “supply of images, text, and information and making available of databases.” The MIB emphasised that providing “credible and factual information in the nature of news” differs from other online content services as it “empowers the citizens to take informed decisions and be aware of their rights and responsibilities.”