Google Adwords Charges 14% Service Tax in India for Online Advertising

If you advertise using Google Adwords in India, you will have a surprise when your bill is generated. If you spend Rs.10,000 in ads, you will be charged with 14% service tax on top of it. So your total bill becomes Rs.11,400.

You pay 14% service tax (Rs.1,400 on Rs.10,000) because online advertising is a service and falls under the service tax umbrella. Before the recent union budget, online advertising was exempted from service tax.

Earlier the service tax used to be 12.36%. My recent Adwords bills still show only 12.36% service tax but it will soon be revised to 14%. So on a bill of Rs.25,000 I am paying additional Rs.3,070 as taxes.

adwords service tax in india

The service tax component is not visible in the dashboard. You may be thinking that you are paying only Rs.5 per click and Rs.100 per lead, but you are actually paying 14% more. The tax component is visible only in the billing area.

Is it fair to pay service tax?

I am not happy to pay service tax when I am running a business. If I spend Rs.10,000 in online advertising and make only Rs.7,000, my loss is Rs.3,000.

When I am in a loss, I do not need to pay income taxes. I am already losing. But even if I am in a loss, I have to pay tax on the spending which is 14% on the Rs.10,000! So instead of losing Rs.3,000 I will be losing Rs.4,400!

Service tax exists to discourage spending so that people save and invest more. But service tax should be exempted for businesses because without investing money one cannot make a profit. Business expenses are investments and they are not ‘consumption’.

This 14% service tax is for all the online advertising spends. All the other networks also charge this tax and the tax is the burden of the buyer of services – not the seller.

What is your opinion about service tax on online advertising? Do you think it is fair?

{ 9 comments… read them below or add one }

sohel shaikh November 20, 2015 at 12:15 pm

its not fair..
i am too unhappy while deduct 14% tax from my adwords account.

Loot Macha Rkhi he… everywhere…


Javed Hashmi May 2, 2016 at 1:01 pm

Yes you are saying absolutely right, this is not fair LOOT hi to macha rakhi hai.


Benny Alexander August 4, 2016 at 4:31 pm

this is not fair at all..i am not happy to run my business in Google adwords. Its too high.


Rahul September 28, 2016 at 10:59 am

14% tax rule is ok but, why Other Tax like kkc and sbc ?


Bhasker Sadak December 18, 2016 at 10:03 am

If the billing is done through the Gulf countries which are tax free nations,still adwords charges in terms of tax??


sunil December 26, 2016 at 4:11 pm

dear i have no tax but i have website and blog but google ad word want to tax no which name of tax but i apply tax name


Ramana January 23, 2017 at 10:44 am

I was shocked to see my adwords account has been billed with service tax. Soon I came to know about this tax. This is not at all fair.


Edward March 17, 2017 at 10:18 am

Hey Deepak, this Google Adwords tax Charges is very full for me and kindly let us know about the facebook advertising tax charges with more details. please do needful.


Deepika September 1, 2017 at 1:12 pm


I am adding GST number on the AdWords account, but it doesn’t display. I tried this many times, but it is not taking. Please help


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