GST cut for e-books, but publishers are not elated

on Aug 23, 2019

A lower tax rate is applicable if titles also have a print version, which has not excited the industry

What might have been a leg-up for book publishers to help reduce their carbon footprint, might just end being a weak announcement by the government. The GST Council has announced some ‘relief’ for publishers in the form of reduction in GST on e-book sales — from 18% to 5%. The reduction is applicable only to books that have a print version as well. The announcement has left publishers — who are usually busy thumbing through manuscripts and dealing with high production costs — perplexed because there appears to be little clarity on what the move means for the industry.

Most publishers, concerned with spiralling costs, voice scepticism. Thomas Abraham, managing director, Hachette India, says, “The whole thing is a bit absurd. It would have made more sense if the rather draconian 12% new GST levied on royalties had been abolished, and the 12% GST on printing material was reduced, back to 5%. Both have come as a double whammy that have raised costs for publishers with no respite, as input tax credit is also not available for books, because books are GST- exempt.” Sanjiv Gupta, COO, Penguin Random House, seems to concur with Abraham. “In India, typically the cost of an e-book is the same as the print book. It’s a welcome step but they should reduce the tax on printing of books. We had VAT earlier and that was 4% to 5% and some printers were charging it and others were not. E-books worldwide have touched 35% of the total business but it has come down to 25%. In India, it has stayed from 5% to 7%.” So will the new GST help? There are many questions. Will just one printed copy suffice for a book to qualify for the reduced GST? And since the announcement comes under Education/Training/Skill Development’, will it apply to fiction and non-fiction?

Waiting for the fine print

Pratik Jain, partner and leader (Indirect Tax), Pricewaterhouse Coopers (PwC), says the notification does not apply only to educational books, “Let’s see the wording of the notification to be issued. It’s not limited to educational books as per the press statement. The only condition is that the print version should exist. Now, whether it does exist or not would depend on facts of the case. If only five copies are printed, there could be a case of evasion.” While Oxford Univerity Press and Amazon Publishing declined to comment, Neelkanth Karinje, CFO, Juggernaut, thinks the announcement will have no impact on the company’s digital publishing business. “We don’t have a print version of text books or those related to education. It seems the government is in no mood to abolish GST on e-books, but only giving a concession to education sector,” he said.