After hectic negotiations between representatives of Indian Broadcasting Foundation (IBF) and Advertising Agencies Association of India (AAAI), it has been agreed that they would follow the practice of issuing 'net' bills instead of the previous 'gross' billing system.
"Over months now, IBF has been in discussions with AAAI for mutual agreement on the process of invoicing. Starting May 1, 2013, media buying agencies will accept net bills from broadcasters. As a consequence, broadcasters have started carrying advertisements again," IBF Secretary General Shailesh Shah said in a statement.
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Net billing is established and advertisers are happy to see their products and services back on television, he added.
Commenting on the agreement, Advertising Agencies Association of India (AAAI) President Arvind Sharma said: "We are happy that we have resolved the impasse. Advertisers' spots will be back on air starting today. We ensured that both broadcasters' and agencies' business interests are protected."
He further said: "We are happy that the solution we have found will meet the needs of our member agencies in terms of their transactions with their clients."
Broadcasters had blacked out commercials since May 1 following the impasse between IBF and advertising agencies.
The IBF had decided to move to the practice of issuing 'net' advertisement bills from 'gross' billing following notices from income tax department to IBF members for non-payment of tax deducted at source (TDS) on 15 per cent agency commission, which used to be reflected in gross bills.
AAAI had opposed moving to the net billing system and said it continued to maintain that the "tax demands made on some broadcasters are bad in law".
In a statement, it said an attempt would be made to get a circular from CBDT that clarifies that broadcasters like other media are not required to deduct TDS from agency commission since broadcasters do not pay the agency commission.
Shah, on the other hand, said broadcasters have been asked to pay taxes on a practice imposed on them by media buying agencies.
"The amount in question does not get transacted between broadcasters and agencies, and accordingly, should not result in tax implications for broadcasters. On the same principle, this non-transacted amount should not appear as such on broadcaster-invoices either," he added.