Hit by COVID-19 outbreak, advertising agencies seek govt help

In a bid to tide over the

COVID-19 crisis, the advertising industry has urged the Centre to allow amortisation benefit on branding expenses over the next three years by treating it as an investment.

Such benefit will encourage the companies to spend more on brand-building, which, in turn, will help the industry in this crisis period, Advertising Agencies Association of India president Ashish Bhasin said on Friday.

The industry body has reached out to the government for the "unprecedented disruptions" due to the coronavirus outbreak and sent a list of suggestions to Union Minister of Information and Broadcasting Prakash Javadekar.

"We have sent our suggestions and the government does not need to dole out any money to support us. Amortisation benefit on advertising expenses for 3 years will encourage the companies to spend more on brand-building and this will help our industry to stay afloat during the crisis," he said.

 

He claimed the association with 110 large advertising agencies represents 80 per cent of the industry.

"Advertising can be treated as investment or capex or even R&D expenditure and such expenses should be allowed to be amortised for three years. Currently, it is treated as an expense and 100 per cent of the amount has to be charged in a single year," Bhasin told PTI.

He also said any payment made to the agencies should not have any TDS deduction going forward, since there is "unlikely to be any significant profit for the year".

"We also want money that is owed to us by way of I-T and GST refunds, and dues from government and PSUs for our advertising bills to be settled immediately," Bhasin said in the letter.

The income and cash flow of the advertising agencies have been in "serious stress" from the last month and unless there is some intervention, many businesses will either file for bankruptcy or will have to be undersized considerably, Bhasin added.