GST for Advertising & Digital Marketing Services 2026 Guide

Key Takeaways

• GST on advertising services applies at 18% across all formats. The only exception is the standalone sale of ad space in print media, which attracts 5%. Bundling creative or design work with print space raises the rate to 18% on the full invoice value.
• Use the correct SAC code based on what you are billing for, not the medium. Wrong codes trigger ITC disputes and audit flags.
• When Google Ireland or Meta Ireland raises the invoice, RCM applies. Pay 18% IGST in cash, issue a self-invoice within 30 days, and claim the tax back as ITC in the same return period.
• Claim ITC only on invoices that appear in GSTR-2B. Provisional ITC claims beyond GSTR-2B reflected invoices are no longer permitted. The deadline is November 30 of the following financial year or the GSTR-9 filing date, whichever is earlier.
• The invoice determines whether an agency is a principal or an agent. If the agency raises the invoice in its own name, GST applies to the full value. If the media owner raises the invoice in the client’s name, GST applies only to the agency’s commission.

GST Rate on Advertising Services

The GST rate you pay depends on the ad format and how the service is billed. Two rules govern this:

• The 5% rate applies only when a publisher sells raw ad space in print media with no creative, design, or production work bundled on the same invoice. 
• The Telangana Appellate Authority (TAA) taxed bundled creative work and print space at 18% GST on the full invoice value. 
• The agency commission on any ad format attracts 18%, regardless of the medium.

One exemption applies: Performances by artists in folk or classical art forms (music, dance, or theatre) are exempt from GST if the fee does not exceed Rs. 1,50,000 per event or performance. This exemption does not apply if the artist is acting as a brand ambassador.

The table below shows the GST rate by ad format at a glance:

Ad Format	GST Rate	Condition
Digital ads (Google, Meta, YouTube, etc.)	18%	All cases
Television commercials	18%	All cases
Radio spots	18%	All cases
Outdoor / hoarding advertising	18%	All cases
Cinema advertising	18%	All cases
Sponsorships	18%	All cases
Standalone ad space in print media	5%	No creative or design bundled
Print ad space bundled with creative or design	18%	Treated as a full advertising service
Agency commission on any format (SAC code 998362)	18%	All cases
Folk or classical artist performance	Exempt	Fee must not exceed Rs. 1,50,000; brand ambassador role excluded

Note: In some cases, if print space is treated as the principal supply in a composite supply, 5% GST may apply to the full value. It is advisable to separate invoices for creative work & print space and confirm classification with a CA.

Example: In M/S Lokmat Media Private Limited (AAR Maharashtra, July 2024), Lokmat sold newspaper ad space to municipal corporations for recruiting medical officers. The AAR ruled that this is exempt from GST under Entry No. 3 of Notification 12/2017-Central Tax (Rate). This exemption applies only when the advertiser is a government or municipal body, and the purpose is directly linked to a function entrusted to that body.

SAC Code for Advertising and Marketing Services

SAC codes classify services under GST, while HSN codes apply only to goods. Advertising and marketing services fall under SAC codes, all starting with ‘99’. 

The right SAC code to use depends on one question: are you selling ad space, or providing an advertising service? Here is the full breakdown:

SAC Code	Service Description	Who Uses It	GST Rate
998361	Advertising services, campaign planning, creative development, copywriting, and execution	Advertising agencies billing for full-service campaigns	18%
998362	Purchase or sale of ad space or time, on commission	Agencies acting as intermediaries and earning a commission on media buys	18%
998363	Sale of ad space in print media, not on commission	Newspaper and print publishers are selling raw ad space directly	5%
998364	Sale of TV and radio advertising time	Broadcasters selling slots directly to advertisers	18%
998365	The sale of internet advertising space includes digital ad inventory management	Digital publishers, platforms, and agencies selling online ad inventory	18%
998366	Sale of other ad space or time, not on commission	Hoarding owners, cinema advertisers, and transit media sellers	18%
998371	Market research services	Market research firms and agencies	18%

Note on SAC 998313: CBIC defines this code strictly as “Information technology (IT) consulting and support services.” It does not cover SEO, social media, or digital marketing consulting. Using it for those services risks ITC disputes. Use 998361 or 998365 instead. It has not been included in the table above for that reason. 

Did you know? 

Some GST tools label SAC as “HSN for services.” This is technically incorrect. The correct term is SAC code. HSN codes apply exclusively to goods.

GST Rate Applied to Digital Marketing Services

All digital marketing services attract 18% GST. This rate applies uniformly across service types, platforms, and billing models.

The table below maps each digital marketing service to its GST rate and SAC code:

Digital Marketing Service	GST Rate	SAC Code	Key Note
SEO (Search Engine Optimization)	18%	998365	Use 998365 for ad inventory and platform management; use 998361 for strategy and campaign work
SEM / PPC (Google Ads, Bing Ads)	18%	998365	Applies whether managed in-house or through an agency
Social media marketing	18%	998365 / 998361	Use 998365 for ad inventory; use 998361 for content creation and campaign execution
Content marketing	18%	998361	Covers blog writing, video scripts, and campaign content
Email marketing	18%	998361	Applies to campaign setup, execution, and management fees
Influencer marketing	18%	998361	Barter deals are taxable at fair market value under Rule 27 of the CGST Rules, 2017
Affiliate marketing	18%	998361	Commission paid to affiliates attracts 18%
Google Ads, billed by Google India Pvt. Ltd.	18%	998365	GST charged directly on invoice; ITC claimable
Meta Ads, billed by Facebook India Online Services Pvt. Ltd.	18%	998365	GST charged directly on invoice; ITC claimable
Google or Meta Ads, billed by a foreign entity	18% under RCM	998365	Indian advertisers must self-declare and pay GST; see RCM section below
Freelancer with annual turnover below ₹20 lakh	Nil	—	No GST registration required; no GST on invoices. RCM trigger still applies if the freelancer is based outside India

For Google and Meta ads billed by a foreign entity, the RCM applies.  

Reverse Charge Mechanism (RCM) on Foreign Ad Platforms

When an Indian business buys advertising services from a foreign platform, the transaction qualifies as an import of services under GST. The Indian recipient bears the GST liability directly under Section 5(3) of the IGST Act, read with Notification No. 10/2017-Integrated Tax (Rate). The foreign supplier has no obligation under Indian GST. 

When RCM Applies

• When the invoice comes from a foreign entity, such as Google Ireland or Meta Ireland.
• When you hire a foreign freelancer or an overseas digital marketing agency.

RCM does not apply when the invoice comes from an Indian entity such as Google India Pvt. Ltd. or Facebook India Online Services Pvt. Ltd.

RCM Process and How to Pay

Add your GSTIN to your Google Ads or Meta Ads account settings. The platform then treats you as a B2B customer and stops charging Indian IGST on the invoice. You then handle the tax yourself through the Reverse Charge Mechanism (RCM).

• Compute 18% IGST on the invoice amount. Pay it through your electronic cash ledger before or at the time of filing GSTR-3B. You cannot use existing ITC to pay RCM liability. Cash payment is mandatory.
• Report the transaction in Table 3.1(d) of GSTR-3B under “Inward supplies liable to reverse charge”.
• Issue a self-invoice within 30 days of receiving the service under Rule 47A of the CGST Rules, 2017, inserted via Notification No. 20/2024-CT, effective November 1, 2024. Missing this deadline attracts interest on delayed tax payment and penalties under Section 122 of the CGST Act.

Claim ITC on the RCM tax paid in the same return period, provided the service is used for business purposes. The cash flow effect is neutral; the IGST paid goes out and comes back as ITC in the same month.

Businesses that are not registered under GST cannot claim ITC. The full GST amount becomes a direct cost with no recovery.

If you run campaigns on any foreign ad platform, check which entity is billing you before every invoice cycle. Getting this wrong means either missing ITC or leaving RCM liability unreported, both of which attract scrutiny during return filing.

Input Tax Credit (ITC) on Advertising and Marketing Expenses

Advertising and marketing expenses are eligible for Input Tax Credit under GST. The 18% GST you pay on agency invoices, platform ad spends, and digital marketing fees can be offset against your output GST liability. This reduces your net marketing cost.

Eligibility Conditions

All four conditions under Section 16(2) of the CGST Act must be met to claim ITC:

• You must hold a valid GST invoice or debit note from the supplier.
• You must have actually received the goods or services.
• The tax on that supply must have been paid to the government by the supplier. GSTR-2B acts as the primary basis for ITC eligibility under the current GST compliance practice. If an invoice does not appear in your GSTR-2B, the supplier has not filed their GSTR-1, and you cannot claim ITC until it does. Provisional ITC claims are no longer permitted beyond GSTR-2B reflected invoices. 
• You must have filed your return under Section 39 (GSTR-3B).

Deadline to Claim ITC

Claim ITC on advertising invoices before whichever comes first: November 30 of the financial year following the year the invoice was issued, or the date of filing GSTR-9 for that year.

Filing GSTR-9 early, before November 30, closes the ITC window immediately. Do not file your annual return before reconciling your full ITC position.

When ITC is Blocked

ITC is not available in these cases under Section 17(5):

• Advertising or marketing expenses for personal use or non-business purposes.
• Expenses on food, beverages, outdoor catering, or hospitality, even if incurred as part of a campaign or event.
• Club memberships, gym memberships, and health and fitness services.

Wrongly claiming blocked credits leads to interest at 24% per annum from the date of the incorrect claim until reversal, plus penalties and possible audit notices.

When ITC is Available

ITC is available on the following advertising and marketing expenses, provided all Section 16(2) conditions are met:

• Agency fees for campaign planning, creative work, and execution
• Digital ad spends on Google, Meta, LinkedIn, and other platforms are billed by Indian entities
• RCM tax paid on foreign platform invoices, claimable in the same return period as payment
• SEO, SEM, content marketing, influencer fees, and affiliate commissions paid to GST-registered vendors
• Outdoor, TV, radio, cinema, and print advertising invoices from GST-registered media owners
• Production costs for ad films, photoshoots, and creative assets when invoiced separately by GST-registered vendors

Claim ITC in the same month the invoice appears in GSTR-2B. Do not wait until the November deadline; delayed claims are harder to reconcile and more likely to attract scrutiny during audits.

Place of Supply Rules for Advertising Services

Place of supply determines whether a transaction attracts CGST plus SGST or IGST. The applicable rule depends on who the recipient is and whether the transaction crosses international borders.

• Domestic Transactions (Section 12): The place of supply is the recipient’s location. A Delhi-based agency billing a Mumbai-based advertiser must charge IGST, not CGST plus SGST. Getting this wrong creates a tax head mismatch that requires amended returns to fix.
• Government Campaigns Across Multiple States (Section 12(14)): When an agency runs campaigns for the Central or State Government, or a statutory body across identifiable states, the place of supply is each such state. The invoice value is apportioned based on the dissemination in each state as per the contract.
• Cross-Border Transactions (Section 13): When an Indian agency provides services to a foreign client on a principal-to-principal basis, the place of supply is outside India. The transaction qualifies as a zero-rated export. The agency must file an LUT and can claim ITC refunds on input costs.

This export treatment does not apply if the agency acts as an intermediary. If the media owner invoices the foreign client directly and the agency only facilitates the transaction, the place of supply shifts to India, and the services become taxable. CBIC Circular No. 230/24/2024-GST clarifies this distinction.

When an Indian business receives services from a foreign ad platform, the place of supply is India, and RCM applies.

GST for Advertising Agencies: Principal vs Agent Model

GST treatment for an advertising agency depends entirely on how it operates. An agency can act as a principal or as an agent, and each model is taxed differently and requires a different invoice structure. 

Principal Model

In the principal model, the agency buys ad space or time from a media owner and resells it to the client in its own name.

• Agencies must charge GST on the full invoice value billed to clients, not just the markup. Digital and broadcast ad space attracts 18%. Standalone newspaper ad space attracts 5%.
• The agency claims ITC on GST paid to the media owner and offsets it against the GST it collects from the client.

Agent Model

In the agent model, the agency procures ad space on behalf of the client and earns a commission. The media owner raises the invoice directly in the client’s name.

GST at 18% applies only to the agency’s commission. The media owner charges GST directly to the client. The agency does not charge GST on the full media value.

a. GST Registration for Agencies

• Agencies must register for GST once their annual turnover crosses ₹20 lakh (₹10 lakh in special category states).
• Agencies that supply services on behalf of a principal must register regardless of turnover, under Section 24 of the CGST Act. The threshold exemption does not apply to them.
• Agencies with a turnover above Rs. 5 crore must generate e-invoices through the IRP for all B2B supplies. This has been mandatory since August 1, 2023.

b. Invoice Requirements

• Every GST-compliant agency invoice must include: the agency name, GSTIN, and address; the invoice number and date; client name, address, and GSTIN; a description of the service and SAC code; the taxable value; the applicable GST rate; and the CGST/SGST or IGST breakdown.
• Agencies with annual turnover up to ₹5 crore must use four-digit SAC codes on B2B invoices. For B2C invoices, the SAC code is optional below this threshold.
• Agencies with annual turnover above ₹5 crore must use six-digit SAC codes on all invoices. This has been mandatory since April 1, 2021, under Notification No. 78/2020-Central Tax.

The Invoice Test

The invoice determines which model applies. If the agency raises the invoice in its own name, it is acting as a principal, and GST applies to the full value. If the invoice is raised in the client’s name by the media owner, the agency is acting as an agent, and GST applies only to the commission. 

Using the wrong model on an invoice or applying the wrong SAC code digit count are the two most common agency compliance errors. Both trigger ITC disputes with clients and scrutiny during return filing.

GST Registration for Advertising & Digital Marketing Businesses

Advertising agencies, digital marketing firms, influencers, and content creators in India must register under GST in the following scenarios:

Scenario	GST Registration	Threshold
Domestic advertising / marketing business	Mandatory above threshold	₹20 lakh aggregate turnover (₹10 lakh in special category states)
Agency acting as agent for clients	Mandatory irrespective of turnover	No threshold (Section 24, CGST Act)
Inter-state supply of services	Mandatory irrespective of turnover	No threshold
E-commerce operator / platform	Mandatory irrespective of turnover	No threshold
Casual taxable person providing event-based advertising	Mandatory before commencing supply	No threshold
Non-resident taxable person	Mandatory before commencing supply	No threshold
Voluntary registration	Optional below threshold	Useful for claiming ITC on ad spend and FBA-style benefits

Agencies and freelancers below the threshold can opt for voluntary GST registration to claim ITC on input costs like office rent, software subscriptions, freelancer payments, and ad platform fees. Once registered, full compliance with GSTR-1, GSTR-3B, GSTR-9, and e-invoicing (above ₹5 crore) is required.

Larger agencies may also consider parallel compliance support through GST return filing services or LLP / private limited company structures, depending on scale.

GST Compliance Checklist for Advertisers and Agencies in India

Use the checklist below to stay GST-compliant across every stage of your advertising and marketing operations:

Area	Action	Details
Registration	Register for GST	Mandatory above Rs. 20 lakh turnover (Rs. 10 lakh in special category states)
	Register if acting as an agent	Section 24, CGST Act. The threshold exemption does not apply
	Add GSTIN to ad platforms	Triggers B2B billing; stops the platform from charging GST
Invoicing	Use the correct SAC code	998361 campaigns; 998362 commission; 998363 print space; 998365 digital
	Use the correct SAC digit count	Four digits up to Rs. 5 crore; six digits above (Notification No. 78/2020-CT)
	Include mandatory invoice fields	Name, GSTIN, address, invoice number, date, SAC code, taxable value, tax breakdown
	E-invoice if above Rs. 5 crore	Mandatory through IRP for all B2B supplies since August 1, 2023
	Self-invoice for RCM	Within 30 days; Rule 47A, CGST Rules, 2017
Return Filing	File GSTR-1 and GSTR-3B on time	Monthly: GSTR-1 by 11th, GSTR-3B by 20th
	Report RCM in GSTR-3B	Table 3.1(d), inward supplies under reverse charge
	Pay RCM in cash	Pay via cash ledger first; claim ITC after
	File GSTR-9 annually	Reconcile ITC fully before filing
ITC Claims	Claim only on GSTR-2B invoices	No ITC until the supplier uploads the invoice
	Pay suppliers within 180 days	Failure triggers a reversal with 18% interest
	Respect the ITC deadline	November 30 of the following FY or GSTR-9 date, whichever is earlier
	No blocked ITC	Section 17(5): food, catering, club memberships, personal use
Record Keeping	Retain records for 72 months	Section 36, CGST Act. Invoices, contracts, RCM records, bank statements
	Reconcile GSTR-2B monthly	Before filing GSTR-3B each month

Need help with GST registration for your advertising agency or digital marketing business, or wish to avoid penalties? RegisterKaro handles end-to-end GST registration and compliance, so you stay focused on running campaigns, not chasing paperwork. Contact us for ITC reconciliation and RCM compliance for advertising and marketing businesses!

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