HSN Code for Digital Marketing and Advertising Services

A digital marketing retainer usually contains four different supplies wearing one invoice line. Creative and campaign work is 998361. Media bought on commission is 998362. Inventory resold on your own account is 998365. Website and app work is 998314, in a different group entirely. Agencies bill all of it as "digital marketing services" and then discover, usually during an export refund claim or a departmental query, that the codes and the contracts do not agree.

Digital marketing is four services, not one

The service accounting codes were written before "digital marketing" existed as a job title, and they classify by what is being supplied rather than by the channel it runs on. That turns out to be a reasonable fit once you decompose a typical retainer:

• Making the advertising — strategy, copy, design, video, campaign setup and reporting.
• Buying the media — placing spend with platforms and publishers, either as agent or as principal.
• Building the assets — the site, the landing pages, the tracking, the app.
• Running the infrastructure — hosting, maintenance, support.

Each has its own code, and the first two sit in a different group from the last two. Our SAC code reference covers the structure of Chapter 99 behind them.

Group 99836: advertising and advertising space

An agency that only makes campaigns bills 998361 and stops there. The moment media money passes through your account, you need to know which of the remaining codes applies, and that is not a coding decision — it is a contractual one.

The commission question: 998362 versus 998365

The distinction runs through the whole heading: on commission or on your own account.

• As agent (998362). The client is contractually liable to the platform; you procure the inventory on their behalf and charge a fee. Only the fee is your supply — provided the arrangement satisfies the pure agent conditions in the Valuation Rules, which require among other things that you act on the recipient's authorisation, that the payment is separately indicated on the invoice, and that the services procured are in addition to your own.
• As principal (998365 or 998366). You buy the inventory on your own account, take the margin and resell. The whole amount billed to the client is your taxable value, and you take credit on the platform's invoice to you.

Websites, apps and hosting

Software supplied on physical media is a good under heading 8523 rather than a service — see our note on computer hardware classification. Everything delivered electronically or as a subscription stays in 99831. Where the recipient is an unregistered person in India and the supplier is abroad, the online information and database access or retrieval rules bring in their own registration obligations, which is a separate question from the code.

Design, research, sponsorship and events

• 998391 — specialty design services: graphic design, industrial design, interior design as a design service rather than as fit-out work.
• 99837 — market research and public opinion polling.
• 998397 — sponsorship services and brand promotion services. Sponsorship to a body corporate or partnership firm is a named entry in the reverse charge notification, so check whether the recipient rather than you should be paying — see our note on the reverse charge mechanism.
• 998596 — organisation and assistance services for events, exhibitions, conventions and trade shows, within the support services heading 9985.
• 998395 — translation and interpretation, which localisation work often falls into.

Foreign clients and the intermediary trap

Agencies and development shops serving overseas clients are usually making zero-rated exports under Section 2(6) of the IGST Act, supplied under a letter of undertaking without payment of tax or with IGST paid and refunded. The condition list is specific: recipient outside India, place of supply outside India, payment in convertible foreign exchange, and the parties not establishments of the same person.

The exposure is Section 13(8) of the IGST Act. Where you act as an intermediary — arranging or facilitating a supply between the foreign principal and third parties rather than supplying on your own account — the place of supply is your own location, the supply is domestic, and the export treatment falls away. Media-buying and lead-generation arrangements are exactly the shapes that attract this argument. The wording of the master services agreement, not the invoice narration, is what will be read. See our guide to place of supply rules.

Invoicing an agency retainer

1. Split the retainer into its supplies. Creative, media, build and hosting are four lines with four codes. A single line called "digital marketing" supports none of them.
2. Decide principal or agent once, in writing, and make the invoice format follow the contract rather than the other way round.
3. Report at the digit level your aggregate annual turnover requires — see the digit rules.
4. Verify the client's GSTIN at onboarding. Agencies carry a month or more of media spend on their own balance sheet before being reimbursed. A client whose registration is suspended cannot take credit on your invoices, which is usually the moment reimbursement stops — checking the GSTIN before the first media spend, as covered in our onboarding verification guide, is credit control as much as compliance.

Frequently asked questions