No GST relief for advertising services, yet ad market turns upbeat

New Delhi: The GST Council’s big reset has slashed rates on hundreds of consumer items and collapsed slabs to 5% and 18% from September 22, with a special 40% category for luxury and “sin” goods. However, one thing that did not budge was the 18% GST on advertising services. 

Even so, India’s ad market is positioned to expand through 2025, powered by the surge in demand these price cuts are expected to unlock.

Cheaper essentials lift FMCG demand, and marketing

From kitchen staples to personal care, everyday items are becoming more affordable. Many food products move down to 5% or even zero, and non-food staples such as shampoos, soaps, toothpaste, talcum powder and hair oil drop from 18% to 5%.

Industry leaders say the lighter tax burden should free up household budgets and spur consumption. 

Dairy and packaged food brands, in particular, are expected to ramp up marketing as consumers spend more freely. Executives in the dairy sector also point to a positive knock-on effect for farmers: higher volumes can improve incomes, confidence and investment in feed and cattle care.

Lower GST across key agricultural inputs and machinery supports this thesis in rural markets. With fertilisers, biopesticides and farm equipment now taxed at 5%, rural purchasing power should strengthen. 

Multiple FMCG marketers told BestMediaInfo.com this reform will help them plan deeper regional and vernacular campaigns to capture new buyers as the festive season approaches.

Autos and durables rev up ad plans

GST on popular small cars, two-wheelers and several home appliances drops from 28% to 18%, improving affordability for middle-class buyers. 

Auto makers said they are preparing affordability-led campaigns tied to festival offers and easy financing, while two-wheeler brands and EV players expect momentum to build through the quarter. 

Consumer-electronics brands are lining up model refreshes and year-end promotions for TVs, air conditioners and kitchen appliances, backed by heavier spends across TV, digital and outdoor.

Hospitality and travel get a marketing tailwind

With simplified, lower hotel tax slabs making stays cheaper, tourism demand and occupancy are expected to rise. Hotel and travel brands are crafting festive getaway promotions, loyalty pushes and value bundles to convert the tax advantage into bookings.

Insurance tax relief unlocks BFSI advertising

A dramatic change came in personal insurance: individual life and health policies now attract nil GST. By removing the 18% levy on premiums, policies become noticeably cheaper. 

Insurers and banks have a timely hook for campaigns that stress affordability, protection and long-term savings. 

The industry is preparing for festive-themed ads highlighting lower entry costs, simplified products and first-time buyer nudges, especially in semi-urban markets where penetration gaps are wider.

Why ad spend rises even without a cut on ad GST

For most large advertisers, GST on advertising is a pass-through via input tax credit. A rate cut would have helped cash flow, not fundamentally changed end-costs. 

With consumer categories benefiting directly from rate reductions, marketers will redirect the headroom towards communication that drives share-of-wallet. 

Small businesses with weaker input-credit positions may still feel the 18% bite on ad invoices, but cheaper shelf prices and stronger footfalls are likely to outweigh that drag during the festive cycle.

Where the money is likely to flow across media

Digital remains the engine of growth as India’s digital ad spend now accounts for roughly two-thirds of the market and continues to expand in double digits, led by retail media, social video, creator content, search and performance. 

Brands will lean into targeted formats that can react quickly to price drops and promotions, while connected TV offers the blend of television impact and digital addressability.

Television remains the second-largest medium and a festive staple for reach. While TV’s annual share has been easing as digital grows, ad volumes can still spike in the festive quarter when FMCG, auto, telecom and e-commerce flood primetime with launch and offer creatives. 

Print, though structurally challenged, tends to benefit cyclically from retail, real estate and government advertising in festival and election-linked quarters, with regional editions attracting local brands that want to publicise price cuts and offers.

Out-of-home and cinema are on a steady rebound. Automakers, real estate developers, travel and hospitality players are booking high-visibility outdoor sites to amplify affordability messages and new product launches. Cinema sees improved traction around holiday releases, with BFSI, auto and consumer-electronics advertisers using the captive environment for high-impact storytelling.

Category weight matters

FMCG contributes the single largest share of India’s ad market, so any expansion in FMCG budgets meaningfully lifts overall AdEx. With input costs easing and retail prices trimmed, many fast-moving consumer brands are poised to increase their media weights to protect or gain share. 

The automotive sector, which saw robust ad growth last year on the back of a sales rebound, now has additional pricing tailwinds. 

Hospitality and travel, buoyed by cheaper room tariffs and packages, are preparing to spend to capture reviving demand. 

Insurance will push harder on reach and consideration as zero-GST premiums expand the funnel.

However, aerated soft drinks and other high-sugar beverages face a 40% rate, and some luxury or sin categories pay more. 

These advertisers may adjust messaging and product mix, focusing on value packs, premium tiers or adjacent “better-for-you” lines. 

At the same time, an industry veteran said these luxury brands may have to advertise more to intensify their messaging to their consumers.