Tax relief a game-changer for digital news publishers already battling big tech

New Delhi: In a bold move to level the playing field, the Ministry of Information and Broadcasting is rallying for a major tax break on digital news subscriptions. They’ve asked the Ministry of Finance to slash the GST rate from a hefty 18% to a more manageable 5%, mirroring the rate for e-books, or ideally, to wipe it out entirely.  

Currently, while printed newspapers enjoy a tax-free status, their digital counterparts are weighed down by this high rate, causing a roadblock in delivering affordable news to the masses. As digital news publishers continue their tug-of-war with big tech giants for fair ad revenue, this tax relief could be a game-changer for the industry’s sustainability and quality. 

According to Sujata Gupta, Secretary of the Digital News Publishers Association (DNPA), regardless of whether news is transmitted via printed newspapers or through digital platforms, it is imperative that news content is made easily accessible at affordable rates. She added, “The current GST levy at the rate of 18% presents an obstacle to the attainment of this goal, as it imposes a considerable burden on the prospective readers and thereby cuts down the number of news readers in the country.” 

Under the current GST regime, printed newspapers, journals and periodicals, as classified under Heading 4902 of the Schedule to the Customs Tariff Act of 1975, are exempt from the levy of GST. However, the same, when published digitally, attracts GST at the rate of 18% due to their classification under Heading 9984, covering telecommunications, broadcasting and information supply services. 

Before 2018, printed books were exempt from GST, while e-books were taxed at 18%. After DNPA's intervention, e-book tax was reduced to 5% in 2018. DNPA now seeks a similar reduction for ePapers. 

A higher tax rate could push the online news sector towards relying more on advertising revenue, potentially affecting the quality and credibility of news content. 

Indranil Roy, CEO of The Outlook, shared his perspective: “We deal in information and knowledge, which is crucial for society. Producing high-quality, well-researched content is costly, so any GST relief would allow us to invest more in our resources and improve content quality.” 

He added, “Social media imposes significant costs to maintain relevance with little return on investment. Big tech’s constant updates drive up expenses, and e-CPM rates in India are dismally low, making traffic-building efforts less viable. The real issue isn't whether content is print or digital—it's about the financial model. GST relief would greatly help us manage our expenses and reinvest in quality content creation.”

Sanjay Sidhwani, CEO of Indian Express, highlighted the urgency for a comprehensive approach. "The digital news industry is struggling to become self-sustaining, and any tax relief would be crucial for its survival," he stated. 

He further explained that tax relief would help make the industry more viable and accessible. "As a public service, media plays a crucial role in democracy. The 18% tax on subscriptions adds to costs, making it harder for quality content to reach the masses." 

Sidhwani also suggested that providing tax concessions to regulated media could incentivise high-quality journalism and combat the spread of fake news. 

With the growing number of Internet users and the nascent state of the online news industry, granting GST exemption or rationalising the tax rate would be beneficial. 

It is expected that the concern raised by a digital news media body will be taken up during the 54th GST Council meeting scheduled to be held on September 9, 2024. 

For the record, Indian digital news publishers are currently battling with big tech companies to ensure fair compensation for the ads displayed within their content.