The GST Battle on Royalty: Publishers Vs Authors

The Goods & Service Tax (GST) that came in with different tax slabs, opened doors to a lot of confusion across industries. In my earlier blog on the Impact of GST on Prints Publications, I mentioned how we faced the disadvantage of no input tax credit for taxes, as books, journals & periodicals fall under the exempted category of GST. With every new law and reform introduced, the number of conflicting points keeps going up. 12% GST is applicable on author royalties on reverse charge mechanism, thereby striking off the option of availing the input tax credit on royalty.

Although books remain exempt from GST to give a push to the reading culture in India, it was assumed that the prices of books will go up by 15-20%. Also, since the publishers could not avail the refunds, they would shift the burden on to the customers. Wondering why I’m giving you a flashback? Here’s why…

A recent hustle in publishing caught my attention, as The Meerut Publishers’ Association filed the writ petition on September 11 against the Centre. The subject matter of filing a petition was the 12% GST payable on author royalty. As per the former taxation system, royalty was being exempted from both Sales Tax and Value Added Tax (VAT). Being in the publishing industry for over a decade now, we publishers operate at a very thin 5% margin. Thereby, facing a crunch! At the same time, even the authors would feel a thrust if it passes on to them.

I feel things don’t always have to be black or white, and there can be a grey angle to it. With that, I’m left with the following conclusions:

We can either –

  • increase the book costs, as assumed, and pass the burden on to the customers, or 
  • lobby to include books under GST

The Centre should take a comprehensive take on this issue as the Indian publishing industry is included among the world’s top seven publishing nations. With an estimated market of INR 10,000 crores, India ranks third after the US and the UK, in English language publishing.

As I conclude this piece, I can only say that along with all the industry experts, even I am eyeing the Delhi High Court’s take on this case, anticipating a new wave in the industry.

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