Supply of ad-space on Myntra’s web platform attracts GST at 18%

The GST Authority for Advance Rulings (AAR) in Karnataka has determined that Myntra Designs, a fashion e-commerce portal, will be subject to an 18% goods and services tax (GST) on the supply of advertising space for a fixed fee. Myntra provided space on its web platform to Lenzing, a company based in Singapore. Myntra argued that since the transaction involved a non-resident entity and the consideration was received in foreign exchange, it should be considered an export of services and not subject to GST. However, the AAR ruled that the issue of whether the transaction is taxable or not is beyond its jurisdiction.

The AAR did provide a ruling on the question of classification and the consequent GST rate. They determined that the service provided by Myntra falls under the classification of “sale of internet advertising space (except on commission)” and is subject to a GST rate of 18%. Myntra sought clarification from the AAR regarding the tax exemption for the transaction, but the AAR stated that it does not have jurisdiction over the matter and therefore declined to provide any clarifications. The spokesperson for Myntra emphasized that the company is fully compliant with all tax laws and that this ruling will not have any negative impact on them.