Mumbai: The Ministry of Information and Broadcasting (MIB) has urged the Department of Revenue to either exempt digital news subscriptions from the Goods and Services Tax (GST) or reduce the tax rate from 18 per cent to 5 per cent, as per media reports. In a letter addressed to Revenue Secretary Sanjay Malhotra, Information and Broadcasting Secretary Sanjay Jaju emphasised that newspapers are exempt from GST due to the importance of providing "correct and factual information" to Indian citizens.
A note attached to the letter warned that the current higher tax burden could hinder the growth of the online news sector, potentially pushing it towards an advertising-based model, which could negatively impact the quality and credibility of news content.
“With the growing internet penetration in India and the nascent stage of the online news industry, it is requested that the disparity between GST on printed newspapers and digital/online news subscriptions be addressed by either exempting the GST on the latter or reducing it from 18% to 5%, aligning it with the rate on e-books,” the letter stated.
Digital publishers have been advocating for this change even before finance minister Nirmala Sitharaman presented the budget for the fiscal year 2024-25 on 23 July. MIB referred to a 29 September 2023, office memorandum that recommended exempting online news subscriptions from GST to create parity with printed newspapers. However, the revenue department's office memo dated 5 June 2024, noted that the GST Council had discussed this proposal during its meeting on 11 July 2023, but did not endorse it.
The MIB also cited a similar issue resolved in 2018 when the GST Council reduced the GST rate on e-books from 18 per cent to five per cent through a notification dated 26 July 2018. The 54th GST Council meeting is scheduled for 9 September, following the last meeting held on 22 June.
In the attached background note, the MIB highlighted that very few internet users in India pay for online news. A higher GST rate on digital news subscriptions could push the online news sector toward an advertising model, potentially affecting the quality and credibility of content through practices such as clickbait, sensational headlines, and fake or misleading news.
The MIB also pointed out that the 18 per cent GST on online news subscriptions generates approximately Rs 21.6 crore in revenue from a total revenue of Rs 120 crore. The MIB argued that reducing the GST to either nil or 5 per cent “may not lead to substantial revenue forgone by the government exchequer.” Online news subscriptions fall under the category of services for the “supply of images, text, and information and making available of databases.” The MIB stressed that providing “credible and factual information in the nature of news” is distinct from other online content services, as it “empowers citizens to make informed decisions and be aware of their rights and responsibilities.”
Currently, printed newspapers, journals, and periodicals are exempt from GST. Under the IGST Act, online news subscriptions are taxed at 18 per cent as Online Information Database Access and Retrieval (OIDAR) services, which are internet services lacking a physical interface between the supplier and the recipient.
