The Karnataka bench of the Authority for Advance Ruling has ruled that the sale of online advertising space is subject to 18 percent Goods and Services Tax.
The e-commerce website Myntra Designs Pvt Ltd approached the AAR on whether or not the provision of advertisement space on its website to the overseas company 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 selling online advertising space and charges a flat fee rather than a commission for this service.
Therefore, this service will be classed as “other professional, technical, and business services” under the GST statute and would be subject to 18% GST.