Many older articles and references state that Service Tax was not applicable on Google AdWords from 1 July 2012. While that was correct at that time, it is no longer applicable today due to the introduction of Goods and Services Tax (GST) in India.
Let’s clarify the current legal position in simple terms.
What Was the Position Earlier (Before GST)?
Under the Finance Act, 2012, certain services were placed under the Negative List (Section 66D)
Sale of advertising space or time slots was included under Section 66D(g)
As a result:
Service Tax rate on Google AdWords was reduced to 0%
Effective from 1 July 2012
Education cess and secondary & higher education cess were also not applicable
This position applied only during the Service Tax regime, which ended on 30 June 2017.
Current Law: Service Tax Is Abolished
Service Tax no longer exists in India From 1 July 2017, GST applies to all services, including online advertising
So the question today is not about Service Tax, but about GST on Google Ads.
Latest Position: GST on Google Ads (As of Now)
1. Google Ads Are Taxable Under GST
Online advertising services are taxable supplies
GST rate applicable: 18%
2. Who Charges the GST?
This depends on which Google entity you are billed by:
Case 1: Google Asia Pacific / Google Ireland (Most Common)
Treated as import of services
GST applicable under Reverse Charge Mechanism (RCM)
Advertiser (Indian business) must:
Pay 18% IGST
Report under RCM in GSTR-3B
Claim Input Tax Credit (ITC) if eligible
Google does not charge GST on the invoice in this case.
Case 2: Google India Private Limited (Rare cases)
Treated as domestic supply
Google India charges 18% GST
GST appears directly on the invoice
ITC can be claimed by GST-registered advertisers
Relevant Legal Provisions (GST)
Section 7, CGST Act – Supply of services
Section 13(2), IGST Act – Place of supply for OIDAR services
Section 5(3), IGST Act – Reverse Charge Mechanism
Notification No. 10/2017 – IGST (Rate) – RCM applicability
Online advertising services (Google Ads, Meta Ads, etc.) fall under OIDAR services.
Common Misconception (Important)
“Google Ads are tax-free” – Incorrect today “Service Tax exemption still applies” – Outdated
GST @ 18% is applicable under current law
Important Disclaimer
Google does not provide tax advice
GST compliance depends on:
Nature of business
Registration status
Eligibility for ITC
Always consult a Chartered Accountant or GST practitioner for correct reporting.
Key Takeaway
| Period | Tax Applicability |
|---|---|
| Before 1 July 2012 | Service Tax applicable |
| 1 July 2012 – 30 June 2017 | Service Tax not applicable (Negative List) |
| From 1 July 2017 onwards | GST @ 18% applicable |
📌 Service Tax exemption on Google AdWords is historical and no longer valid today.
