With the lockdown in India reaching almost a month, the president of the Advertising Agencies Association of India (AAAI), Ashish Bhasin, has sent a detailed set of recommendations on behalf of the members of the organisation, to India's Union Minister of Information and Broadcasting Prakash Javadekar.
Bhasin, who is also the Dentsu Aegis Network's APAC CEO and India chairman, states that the lockdown has 'seriously affected the advertising agency business'. Since the bulk of the agency’s costs are fixed in nature, be it salaries, rent, electricity, communication, upkeep, media audience measurement reports, etc., agencies have been in serious stress. He further states that since cash flow has been affected, many businesses in the advertising industry will either file for bankruptcy or will have to undersize considerably.
Bhasin further notes how the INS (Indian Newspaper Society) and IBF (Indian Broadcasting Foundation) have been kind enough to permit AAAI members to pay monies they have collected from their clients and not insist on what is due to them on the due dates.
Even with this help, Bhasin believes the continuity of the agency business cannot be for long without the help of the Government of India.
Bhasin has sent a detailed set of recommendations on behalf of the members of AAAI, to the Union Minister of Information and Broadcasting, Prakash Javadekar.
In the letter, Bhasin has urged the Government to do the following:
Return the money that is owed to agencies by way of IT, GST refunds and dues from Government and PSUs for advertising bills to be settled immediately.
Any payment made to agencies should not suffer any TDS deduction going forward, since there is unlikely to be any significant profit for the year.
Banks and debtors provide the much needed cash flow to pay salaries and meet other essential expenses, etc.
Treat advertising expenses as an investment and have this cost amortised over the next three years. This will encourage larger advertising outlay which will help revive the economy faster.
Advertising expenses could be given weighted deduction while computing taxes. The suggestion is that every Rs 100 spent on advertising, should be treated as Rs 200, while computing the taxable income.
Bhasin said, "These do not lead to any revenue loss to the Government. They just need to show a kind heart. The timely help they will provide actually is the help they are providing to the people of India, since advertising is a critical input that can provide a ripple effect in reviving many sectors of the economy."