Updated: Ads back on TV as IBF and AAAI resolve impasse

Representatives of IBF and AAAI last night arrived at a mutual solution that meets the needs of broadcasters and at the same time assures agencies of their legitimate earnings

BestMediaInfo Bureau | Delhi | May 6, 2013

The standoff between broadcaster and ad agencies over the last few days has ended following a late-night decision last night. Broadcasters, facing tax liabilities on account of non-deduction of TDS on agency commission, had stopped airing ads. This was because advertising agencies did not agree to their proposal to move to net billing.

AAAI continues to maintain that the tax demands made on some broadcasters are bad in law. It has committed that it will attempt to get a circular from CBDT. A circular that clarifies that broadcasters like other media  are not required to deduct TDS from agency commission since broadcasters do not pay the agency commission.

In a meeting that lasted over seven hours, representatives from IBF and AAAI last night arrived at a mutual solution that meets the needs of broadcasters and at the same time assures agencies of their legitimate earnings. As a result, advertisers' ads will be back on air starting today, May 3, 2013.

Arvind Sharma, President, AAAI, said, "We are happy that we have resolved the impasse.  Advertisers' spots will be back on air starting today. We ensured that both broadcasters' and agencies' business interests are protected.  We are happy that the solution we have found will meet the needs of our member agencies in terms of their transactions with their clients."

In a separate statement, IBF said that over months now, it had been in discussions with AAAI for mutual agreement on the process of invoicing. “Starting May 1, 2013, media buying agencies will accept net bills from broadcasters.  As a consequence, broadcasters have started carrying advertisements again.”

The statement further said: “Leadership from both, AAAI and IBF, along with yeoman help from their CFOs and tax experts, arrived at a way forward that aligns with what is correct and makes life easier for all concerned.

“Broadcasters and media buying agencies have been hogging headlines for the last few days.  Broadcasters had stopped carrying advertisements on their channels, as they did not see agencies realising the seriousness of the issue at hand.  Broadcasters have been asked to pay taxes on a practice imposed on them by media buying agencies. The amount in question does not get transacted between broadcasters and agencies, and accordingly, should not result in tax implications for broadcasters.  On the same principle, this non-transacted amount should not appear as such on broadcaster-invoices either.

“After much ado, advertisements are back, net billing is established and advertisers are happy to see their products and services back on television.”

Info@BestMediaInfo.com

Info@BestMediaInfo.com