𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝗣𝗹𝗮𝗰𝗲 𝗼𝗳 𝗦𝘂𝗽𝗽𝗹𝘆 𝗳𝗼𝗿 𝗔𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 𝗣𝗿𝗼𝘃𝗶𝗱𝗲𝗱 𝘁𝗼 𝗙𝗼𝗿𝗲𝗶𝗴𝗻 𝗖𝗹𝗶𝗲𝗻𝘁𝘀 - 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗡𝗼. 𝟮𝟯𝟬/𝟮𝟰/𝟮𝟬𝟮𝟰-𝗚𝗦𝗧 📢 The Ministry of Finance issued clarifications regarding the place of supply for advertising services provided by Indian advertising companies/agencies to foreign clients.

🔍 𝗞𝗲𝘆 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀: 𝟭. 𝗜𝘀𝘀𝘂𝗲 𝗶𝗻 𝗕𝗿𝗶𝗲𝗳: Clarifications were sought on whether Indian advertising companies providing services to foreign clients qualify as intermediaries, and whether the place of supply is within India, thereby denying the export benefits.

𝟮. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝘁𝗵𝗲 𝗔𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗖𝗮𝗻 𝗕𝗲 𝗖𝗼𝗻𝘀𝗶𝗱𝗲𝗿𝗲𝗱 𝗮𝘀 𝗮𝗻 𝗜𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝗿𝘆: Clarification: The advertising company enters into separate agreements with the foreign client and media owners for procuring media space. These are principal-to-principal agreements, and the advertising company is not acting as an agent. Therefore, it does not qualify as an intermediary under Section 2(13) of the IGST Act, and the place of supply cannot be determined under Section 13(8)(b).

𝟯. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝘁𝗵𝗲 𝗥𝗲𝗽𝗿𝗲𝘀𝗲𝗻𝘁𝗮𝘁𝗶𝘃𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗙𝗼𝗿𝗲𝗶𝗴𝗻 𝗖𝗹𝗶𝗲𝗻𝘁 𝗼𝗿 𝗧𝗮𝗿𝗴𝗲𝘁 𝗔𝘂𝗱𝗶𝗲𝗻𝗰𝗲 𝗶𝗻 𝗜𝗻𝗱𝗶𝗮 𝗜𝘀 𝘁𝗵𝗲 𝗥𝗲𝗰𝗶𝗽𝗶𝗲𝗻𝘁: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: The foreign client is the recipient of the advertising services, as per Section 2(93) of the CGST Act. The representative in India or the target audience cannot be considered the recipient.

𝟰. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝗔𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 𝗔𝗿𝗲 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲-𝗕𝗮𝘀𝗲𝗱 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: The advertising services provided do not involve the physical presence of goods or the recipient. Therefore, they cannot be classified as performance-based services under Section 13(3)(a) or Section 13(3)(b) of the IGST Act.

𝟱. 𝗣𝗹𝗮𝗰𝗲 𝗼𝗳 𝗦𝘂𝗽𝗽𝗹𝘆: Clarification: Since the services do not fall under specific provisions of Section 13(3) to 13(13), the place of supply is determined as per the default rule in Section 13(2), i.e., the location of the recipient. For foreign clients, the place of supply is outside India, and the services can be considered exports.

𝟲. 𝗜𝗻𝘀𝘁𝗮𝗻𝗰𝗲𝘀 𝗪𝗵𝗲𝗿𝗲 𝘁𝗵𝗲 𝗔𝗱𝘃𝗲𝗿𝘁𝗶𝘀𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗔𝗰𝘁𝘀 𝗮𝘀 𝗮𝗻 𝗜𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝗿𝘆: Clarification: If the advertising company merely facilitates the provision of media space between the foreign client and media owner, it acts as an intermediary. In such cases, the place of supply is the location of the advertising company, as per Section 13(8)(b).

📜 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗡𝗼.: 230/24/2024-GST 𝗗𝗮𝘁𝗲: 10th September 2024 𝗦𝗼𝘂𝗿𝗰𝗲: Ministry of Finance, Government of India

This circular ensures clarity on the place of supply for advertising services provided to foreign clients, confirming the eligibility for export benefits in relevant cases.