Digital Marketing is the new revolution sweeping the globe and national and multinational companies alike are taking full advantage of the same. Digital Marketing has become an integral part of economies around the world and Indian Economy is no exception. Indian Economy is caught in the eye of a storm with GST and it will have a profound impact on the digital market economy as well.
GST is a huge step in the history of tax reforms to create confidence and an atmosphere of investment, manufacturing, and growth. GST is portrayed to provide the requisite impetus to the business sector and at the same time reducing the price burden due to regressive taxes on the consumers.
The most salient feature of the GST is that it would remove the multiple taxes levied on products both by the state and central government by virtue of taxes being in the concurrent list. GST seeks to replace these taxes which are primarily regressive in nature, due to which a cascading effect is created and as a result, the ordinary consumer pays around 20-30% extra. Another major problem with the previous tax regime was that there were constant disputes about whether certain items come in the category of goods or services and this would be addressed by GST as it explicitly provides a rate card to the same effect.
Digital Marketing and Advertising agencies fall under the services sector and would now be subjected to the Central GST, State GST and the Integrated GST which they will have to charge at 18% which was previously 15% as well as per the state/base of the client. However, previously digital marketing services were not eligible for input tax credit for the taxes paid, which now stands changed. The result
The result will, however, be an increase in the cost of digital marketing as well as the Google Tax Equalization Levy effective from 1st June 2017 will further add to it. This will also increase the cost of digital services in all.
This will go through the initial implementation turbulence which will cause static in the workings of small businesses more than MNCs who are expected to be covering all tracks.