AAAI reaches out to government for business continuity; sends recommendations to help advertising agencies

The Advertising Agency business, like many other businesses have been adversely affected by the lockdown and with the lockdown extended till May 3, the industry believes that the continuity of the Agencies business cannot be for long without the help of the Government of India. Keeping this in mind, Ashish Bhasin, president, Advertising Agencies Association of India (AAAI) has sent recommendations on behalf of the members of AAAI, to the Union Minister of Information and Broadcasting Prakash Javadekar, highlighting the importance of the advertising industry for the accelerated revival of the economy.

“We want money that is owed to us by way of IT and GST refunds, and dues from Government and PSUs for our advertising bills to be settled immediately. We have also said that any payment made to us should not suffer any TDS deduction going forward, since there is unlikely to be any significant profit for the year. Further we have sought a direction to banks and our debtors that they provide the much needed cash flow to pay salaries and meet other essential expenses, among others” Bhasin said. He further added that the recommendations suggested by AAAI do not lead to any revenue loss to the Government but are instead provided to the people of India, since advertising is a critical input that can provide a ripple effect in reviving many sectors of the economy.

According to AAAI, the bulk of the agency’s costs are fixed in nature, for instance salaries, rent, electricity, communication, upkeep, media audience measurement reports, among others. The income and cash flow of the agency has been in stress over the last month and unless there is some intervention, many businesses will either file for bankruptcy or will have to undersize considerably.

AAAI also recommended that advertising expenses should be treated as an investment and have this cost amortised over the next three years. AAAI believes this will encourage larger advertising outlay which will help revive the economy faster. In the same vein, AAAI also suggested that advertising expenses could be given weighted deduction while computing taxes. The suggestion was that every Rs 100 spent on advertising, should be treated as Rs 200, while computing the taxable income.