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A Complete Guide to GST and TDS Rate on Promotion Via Google Ads

Updated on :  

08 min read.

Google Ads is an online advertising platform from Google. You can create online ads and campaigns to reach your target audience. This helps sell your product, promote business and increase traffic to your website.

This article will discuss how you do promotions via Google Ads work. Also, the implications of GST, TDS and Equalisation Levy under the Income Tax Act.

How does Promotion via Google Ads work?

Firstly, a person has to decide his advertising objective. Depending on the objective, you have to select the type of campaign, for example, display ads, video ads or shopping ads. Next, you need to set the bid and budget for advertising your campaign.

Accordingly, a cost per click is determined. Google charges you immediately after your campaigns run. Businesses meeting certain conditions are eligible for a monthly credit period. 

If advertising with Google’s entity registered in India (i.e. Google India Private Limited), they accept payment through net banking, Paytm wallet, or credit or debit cards. While advertising with Google’s entity registered outside India, they accept payment through credit or debit cards.

Implications under Income Tax Act (TDS and Equalisation Levy)

If a transaction is entered with Google’s entity registered in India, this service will be covered under the purview of TDS (u/s 194C), and 2% needs to be deducted from the amount before taxes. The equalisation levy will not be applicable for this transaction. 

Further, TDS u/s 194C will be applicable only if the invoice amount (before taxes) is above Rs 30,000 for a single invoice or aggregate amount (before taxes) for all invoices in a financial year exceeds Rs.1,00,000. 

Usually, the entire invoice amount is paid to Google, and when we submit TDS certificates to Google, the amount of TDS is remitted back into the account.

If a transaction is entered with Google’s entity registered outside India, this service will be covered under the purview of the equalisation levy. Equalisation levy @ 6% needs to be paid to the government. This is an additional cost for businesses as the tax credit is not allowed.

The equalisation levy will be applicable only if consideration exceeds Rs.1,00,000 for the financial year. Accordingly, no TDS will be applicable for this transaction.

Implications under GST

Services provided by Google’s entity registered in India will be covered under forward charge. They will charge 18% GST on their invoices. Businesses can avail this as their eligible input tax credit. They will need to provide their GSTIN to Google.

Services provided by Google’s entity registered outside India will be considered the import of services under GST. Businesses need to pay GST under the reverse charge mechanism and can avail this also as their eligible input tax credit.