Should bloggers register for GST? The whole story and a clarification

Yesterday, The Economic Times carried a story in print (see online version here) that explores whether GST will apply to bloggers.

One of the quote mentions ClearTax and is reproduced below.

Bloggers earning under `20 lakh a year from their blogs do not have to register for GST, said a tax consultant with online tax-filing platform ClearTax. “GST will be charged only on earnings above `20 lakh per annum,“ the consultant said. 

 

This is to clarify that ClearTax was incorrectly quoted in this story.

It is true that those with turnover of more than Rs 20lakhs must register for GST. However, suppliers (of goods or services) who make inter-state supplies, must compulsorily register. This threshold does not apply to them.

(Read more about who should register for GST – here)

Our team is committed to bring the most authentic, easy, simple and detailed information to you. We write extensively on both income tax and GST via our website, blog and through print and web engagements with major publications. So, it is important for us to bring forth our correct views on this topic.

Let’s consider the issue of whether GST applies to bloggers in detail.

Bloggers earns income from advertisements placed on their website. In the general course of business, advertisement is a taxable supply of service and will be chargeable to tax under the GST act.

The person who places or requests the advertisement on a medium will be a receiver of services, and the person who publishes the advertisement on tv/radio/print will be supplier. Say a television channel is showing advertisements of a toothpaste company. So the tv channel is a supplier of service and the toothpaste company is a receiver of service. The tv channel will raise an invoice on the tooth paste company and levy and collect GST.

However, in the case of a blogger, there are some aspects we must consider –

  • Is the blogger a supplier? The blogger provides internet real estate for companies to host their advertisement. So a supply of service is made. And therefore the blogger is a supplier.
  • Who is the receiver? While payments are made by google, it acts as clearing house since the advertisements are placed by companies who pay to google directly. These companies whose ads are hosted do not directly interact with the blogger. The blogger does not exactly know how much to charge from these companies for the advertisements he/she hosts on the blog.
  • Does the blogger know GSTIN or other relevant details of companies who place ads on the blog? Here the blogger only interacts with google adsense. It does not know which advertisements were placed on his/her website. Who should pay for those advertisements. Whether those companies are registered under GST. And to whom should the blogger raise an invoice.
  • Who makes payments to blogger? Payments are made by google adsense to the blogger based on traffic and advertisements on the blog. The blogger does not raise any invoice, even though it acts as a supplier. Meanwhile google charges companies for advertisements they place. So there is no direct relation between the supplier and the receiver here.
  • Google is neither a supplier nor a receiver of service of advertisements.

While several aspects and scenarios have been addressed in the GST act, this kind of a set up has not been specifically addressed. Until more clarity emerges, we request bloggers to avoid unnecessary worry on whether they must register. We will keep our readers posted if the govt notifies any changes to the above. A lot of our readers have referred us to this. However, we do not believe registration is immediately required, given there’s not enough clarity based on the points listed above.

 

The counter view

All of discussion below is well only a hypothesis, since enough clarity does not exist in the GST Act about whether such Bloggers must register. Besides, Google as a clearing house, does not appear to satisfy the conditions of an ‘e-commerce’.

The scenario may change only in one situation where Google decides to invoice to Advertisers and at the same time offer a report/statement basis which Bloggers can invoice to Google. Here the transaction may be broken down in 2 phases. [Caution: As we said, this is only a hypothesis, the GST act does not require these transactions to be broken down as such.]

Transaction 1–> Google (supplier) and Advertiser (recipient)

Transaction 2–> Blogger (supplier) and Google (recipient)

To be able to raise an invoice, it is important to identify where the place of service shall be.

Both supplier and recipient based in India

If company who advertises is based in India and is registered and Google is also invoicing from India

– IGST will be levied where the advertiser and google are based in different states.

– SGST + CGST will be levied where advertiser and google are in the same state.

Same logic will apply for invoice which will be raised from the Blogger to Google.

 

Where either the supplier or recipient are based out of India

If companies who advertise or Google or Blogger, basically, any one party in the two transactions listed above are based out of India, the services are assumed to be supplied at the location of the recipient. And the law states that in such cases of online service – the recipient is assumed to be in India when any 2 of the following conditions is satisfied –

  • location of address presented by the recipient of service through internet is in India
  • the credit card or debit card used is issued in India
  • the billing address of recipient is in India
  • IP address of the device used by recipient is in India
  • the bank of the recipient which is used for payment is maintained in India
  • the country code of subscriber identity module card used by the recipient is of India

As can be seen these scenarios are only possible when Google agrees to provide a statement to the Blogger so the blogger can raise an invoice to Google.

Should this aspect be covered under reverse charge?

If Google is based in India and is registered should it then pay GST on reverse charge basis, in case of payments made to bloggers? As per the list of services on which reverse charge applies, this type of blogger services are not covered.

We hope the GST council will clarify this situation in due course. As of now, these services do not attract service tax.

One Response to Should bloggers register for GST? The whole story and a clarification

  1. Keshav Maheshwari June 28, 2017 at 5:06 pm #

    Thanks for this article. it is the most comprehensive piece I have found. Pretty good research and explanation.

    Though, I would want you to change something above. That, users should register themselves for their safety.

    I am meeting my CA now to discuss this, and somebody also told me that one can claim refund on this under GST. Not clear on what, and how.

    But all in all, I believe the info you have provided above is even more practical and correct than most CAs in small cities would come up with. Not many CAs have idea of blogging and its nature.

    Let’s see.