Advertisement HSN Code and GST Rate
What is the HSN Code for Advertisement Services?
If you're running an advertising agency, media company, or business booking ads, knowing the correct HSN code for advertisement is essential for GST compliance. Actually, advertisements are services, not goods, so they use SAC (Services Accounting Code) instead of HSN code. The SAC code for advertisement services is 998361, which falls under Chapter 99 that covers all services in India.
The GST rate on advertisement is 18% for most advertising services including digital ads, TV commercials, radio spots, outdoor advertising, and sponsorships. However, print advertisements in newspapers attract a lower 5% GST when sold as standalone space without additional creative or production services.
SAC Code for Different Advertisement Types
Since advertisement is a service, here's the correct classification:
| Advertisement Type | SAC Code | Description | GST Rate |
|---|---|---|---|
| Digital Advertising | 998361 | Google Ads, Facebook Ads, Instagram, YouTube ads | 18% |
| Print Advertising | 998361 | Newspaper ads, magazine ads, brochures | 5% or 18% * |
| TV Commercials | 998361 | Television advertisement slots | 18% |
| Radio Advertising | 998361 | Radio commercial spots | 18% |
| Outdoor Advertising | 998361 | Billboards, hoardings, bus shelters | 18% |
| Online Display Ads | 998361 | Banner ads, pop-ups, sponsored content | 18% |
| Social Media Marketing | 998361 | Influencer marketing, paid posts | 18% |
| Email Marketing | 998361 | Bulk email campaigns, newsletters | 18% |
Note: Print ads in newspapers attract 5% GST only when sold as pure advertising space. If creative design, production, or other services are included, the full 18% GST applies.
Understanding SAC Code 998361
SAC Code Breakdown:
- 99 = Chapter number (all services start with 99)
- 83 = Major service category (Advertising services)
- 61 = Specific service nature (Advertising and provision of advertising space)
| SAC Code Component | Meaning |
|---|---|
| First 2 digits (99) | Services chapter |
| Next 2 digits (83) | Advertising services category |
| Last 2 digits (61) | Advertising space provision |
GST Rates on Advertisement Services (2025-2026)
The government updated GST rates effective September 22, 2025. Here's the current structure:
| Service | SAC Code | CGST | SGST | IGST | Total GST |
|---|---|---|---|---|---|
| Digital Ads | 998361 | 9% | 9% | 18% | 18% |
| TV/Radio Ads | 998361 | 9% | 9% | 18% | 18% |
| Outdoor Ads | 998361 | 9% | 9% | 18% | 18% |
| Print Ads (Newspaper only) | 998361 | 2.5% | 2.5% | 5% | 5% |
| Full Service Ads | 998361 | 9% | 9% | 18% | 18% |
Note:
- CGST + SGST = Total GST for intra-state supplies
- IGST applies for inter-state supplies
- CGST = Central GST, SGST = State GST, IGST = Integrated GST
How to Calculate GST on Advertisement Services
Calculating GST on advertising services is straightforward:
Formula: Base Price + (Base Price × 18%) = Total Invoice Value
Example 1: Digital Advertising Campaign
- Ad campaign cost: ₹1,00,000
- GST at 18%: ₹1,00,000 × 18% = ₹18,000
- Total invoice = ₹1,00,000 + ₹18,000 = ₹1,18,000
Example 2: Newspaper Advertisement
- Newspaper ad space: ₹20,000
- GST at 5%: ₹20,000 × 5% = ₹1,000
- Total cost = ₹20,000 + ₹1,000 = ₹21,000
Example 3: Full-Service Ad Agency
- Creative design + production + placement: ₹5,00,000
- GST at 18%: ₹5,00,000 × 18% = ₹90,000
- Total invoice = ₹5,00,000 + ₹90,000 = ₹5,90,000
Special Case: Reverse Charge Mechanism (RCM)
Important for Businesses:
If you're an Indian business buying digital advertising services from foreign companies (like Google Ads, Facebook Ads from Ireland/USA entities), you must pay GST under the Reverse Charge Mechanism (RCM).
| Scenario | Who Pays GST | Rate |
|---|---|---|
| Indian agency provides ads to Indian client | Agency pays GST | 18% |
| Foreign company provides ads to Indian business | Indian business pays GST (RCM) | 18% |
| Indian agency provides ads to foreign client | Export (Zero-rated) | 0% |
Common Advertisement Services and GST
| Service Provider | Service Type | SAC Code | GST Rate |
|---|---|---|---|
| Advertising Agency | Full-service campaigns | 998361 | 18% |
| Google/Meta | Digital ads (foreign entity) | 998361 | 18% (RCM) |
| Newspaper Publisher | Ad space only | 998361 | 5% |
| Newspaper Publisher | Ad space + design | 998361 | 18% |
| Billboard Company | Outdoor advertising | 998361 | 18% |
| Radio Station | Radio commercial slots | 998361 | 18% |
| TV Channel | TV commercial slots | 998361 | 18% |
| Influencer | Sponsored posts/content | 998361 | 18% |
Can You Claim Input Tax Credit (ITC) on Advertising?
Yes, businesses can claim ITC on advertisement expenses if:
| Condition | ITC Allowed? |
|---|---|
| Advertising for business products/services | ✅ Yes |
| Have GST registration | ✅ Yes |
| Proper tax invoice with SAC code | ✅ Yes |
| Personal/non-business advertising | ❌ No |
| Advertisement for exempt supplies | ❌ No |
Example: A clothing brand spending ₹2,00,000 on digital ads can claim ₹36,000 (18% of ₹2,00,000) as input tax credit if they have proper invoices.
Why Using Correct SAC Code Matters
Using SAC 998361 correctly is important because:
| Reason | Impact |
|---|---|
| Accurate GST Filing | Avoid tax notices and penalties |
| ITC Claims | Claim proper input tax credit |
| Professional Invoicing | Create GST-compliant invoices |
| Audit Protection | Correct records during GST audits |
| Legal Compliance | Stay within GST regulations |
Wrong SAC codes can lead to GST notices, ITC rejection, and penalties up to ₹25,000 per year.
Common Questions About Advertisement GST
Q: Do influencers need to charge GST on sponsored posts? Yes, if their turnover exceeds ₹20 lakhs (₹10 lakhs in special category states), they must register for GST and charge 18%.
Q: Is GST applicable on free ads or barter deals? Yes, GST applies even on barter transactions based on the fair market value of the advertisement service.
Q: What's the difference between 5% and 18% on print ads? Pure newspaper advertising space = 5% GST. If creative design, production, or other services are bundled = 18% GST.
Q: Can startups claim ITC on advertising expenses? Yes, as long as the advertising is for business purposes and proper GST invoices are obtained.
Conclusion
The SAC code for advertisement services is 998361, and the GST rate is 18% for most advertising including digital, TV, radio, and outdoor ads. Print advertisements in newspapers attract a reduced 5% GST when sold as standalone space without additional services.
Whether you're an advertising agency, media company, or business spending on marketing, always use the correct SAC code 998361 on your invoices. Remember to charge 18% GST for full-service campaigns and understand the Reverse Charge Mechanism when buying ads from foreign digital platforms like Google or Facebook.
For businesses, advertising expenses are eligible for Input Tax Credit, making it important to maintain proper GST invoices with the correct SAC code. This ensures smooth compliance and maximizes your tax benefits under the GST regime.
Disclaimer: GST rates are subject to change based on government notifications. Always verify current rates from official GST portals before filing returns.
