GST on Digital Marketing Services: Tax Rates & Input Credit Explained
With businesses rapidly shifting to online platforms, digital marketing services have become essential for brand visibility and growth. Whether it’s social media advertising, SEO, influencer marketing, or email campaigns, these services fall under the GST regime in India. In this blog, we’ll explain the GST on digital marketing services, applicable tax rates, SAC codes, and how businesses can claim Input Tax Credit (ITC) on such services.
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Are Digital Marketing Services Taxable Under GST?
Yes. As per GST law, digital marketing is a taxable service. It includes a wide range of online promotional activities and is categorized under professional or business support services.
Whether you’re hiring an agency or a freelancer, the GST for digital marketing services is applicable if the service provider is registered under GST.
GST Rate on Digital Marketing Services
All forms of digital marketing—whether strategy, execution, or platform-based promotions—are taxed at a standard rate of 18%.
| Type of Digital Marketing Service | GST Rate |
|---|---|
| SEO, SEM, SMM, Content Marketing | 18% |
| Paid Advertising (Google, Meta, etc.) | 18% |
| Influencer Marketing | 18% |
| Email and WhatsApp Marketing | 18% |
| Web Analytics, Branding Services | 18% |
SAC Code for Digital Marketing Services
| Service | SAC Code | GST Rate |
|---|---|---|
| Digital Marketing (All categories) | 998361 | 18% |
| Online Ad Campaigns | 998365 | 18% |
Refer to correct SAC code list for proper GST billing and ITC filing.
GST Compliance for Digital Marketing Agencies and Freelancers
Agencies:
- Must issue GST-compliant invoices
- Collect 18% GST from clients
- File monthly/quarterly GST returns
- Claim ITC on input services like ad spend, tools, software, etc.
Freelancers:
- Must register under GST if turnover exceeds ₹20 lakh (₹10 lakh in special category states)
- Collect and pay GST if registered
- Eligible to claim ITC on business-related expenses
Explore related options under GST Composition Scheme if you’re a small service provider.
Input Tax Credit (ITC) on Digital Marketing
Businesses that use digital marketing services to promote their products or services can claim ITC on the GST paid, provided:
- The service is used for business purposes
- You have a valid GST invoice with SAC and GSTIN
- Your supplier has filed their GST returns properly
Common ITC claims include:
- Payments to digital marketing agencies
- Subscriptions to SEO or analytics tools
- Platform charges (Google Ads, Facebook Ads)
Know more at ITC eligible expenses under GST.
Place of Supply and Reverse Charge Implications
If digital marketing services are availed from an overseas agency (e.g., a US-based freelancer), GST is payable under Reverse Charge Mechanism (RCM) by the recipient in India.
This ensures GST revenue is collected even when the supplier is not located in India.
Conclusion
The GST on digital marketing services is uniformly set at 18%, making it easy for businesses and service providers to calculate taxes. Whether you’re outsourcing to an agency or running in-house campaigns, proper GST compliance ensures you can claim ITC and reduce your net tax burden. As digital marketing continues to grow, staying updated with SAC codes, billing norms, and reverse charge rules is crucial for smooth operations and cost efficiency.
I am a Fellow Chartered Accountant (FCA) and LLB graduate with 10 years of experience in corporate auditing, taxation, and financial consulting. My expertise includes corporate audits, income tax planning, HSN code classification, and GST rate advisory. Through my blogs and articles, I aim to simplify corporate taxation, auditing, and GST compliance, making financial matters more accessible for professionals and business owners.
Frequently Asked Questions (FAQs)
- What is the GST on digital marketing services?The GST is 18%, applicable to all types of digital marketing services.
- Do freelancers offering digital marketing need to register for GST?Yes, if their annual turnover exceeds the GST threshold of ₹20 lakh.
- Can a company claim ITC on digital marketing expenses?Yes, if the expenses are for business use and proper GST invoices are maintained.
- What is the SAC code for digital marketing?The SAC code is 998361, under market research and advertising services.
- Is GST applicable on Facebook or Google Ads?Yes, 18% GST is applicable, and in case of foreign billing, it is paid under RCM.
