MAM
Taxing thoughts for the advertising agencies
MUMBAI: The advertising agencies association of India (AAAI), in a bid to ensure that agencies have a complete understanding of the accounting systems, organised a seminar for all agencies addressing the issue of tax deduction at source (TDS) and its implications. The seminar also addressed to relevant details vis-a-vis the new system of electronic TDS which will come into play from 1 April 2005.
Addressing the seminar chief commissioner of income tax Hardayal Singh told the gathering that although India was developing at a decent pace but as regard to taxation issues there still remain certain issues that pose serious concerns.
Since the 1980’s the country has been growing at a rate of 6 to 8 per cent per annum. Nevertheless the tax – GDP ratio in India remains at a poor 15 per cent as compared to the UK (37.4), the US (29.6), Japan (27.1) and Korea (26).
Subsequently the direct tax to GDP ratio of UK accounts for 13.27 per cent, Australia’s 16.46 per cent while India lags far behind at 3.26 per cent. The relevance of this data was really to drive home the point that tax collection in India stands remains in a dismal state. Hence to raise the level of tax collection as painlessly as possible, one of the primary ways is through TDS (tax deduction at source). Avowed to the purpose of raising the tax levels in accordance with the law and with minimum cost to the society and the government, strategies that were broadly proposed were as follows:
Publicity campaign propagating TDS
Making compliance as easy as possible
Ensuring awareness of the obligation deductors (agencies) have towards the government
Carrying out surveys to analyse how companies are going about their tasks and help them comply better.
Also ensure that the Government relies on voluntary compliance.
Going back a bit, in June 2003 the government introduced e-filing of the returns. 31 June 2003 witnessed a reduction in the number of returns filed to only three. Now in the New Year, come April and sec 199 will undergo a change with deductors not having to issue a TDS certificate to the deductee and instead OLTAS (Online tax accounting system) will come into play. Also de-materialisation of TDS certificates will take place with the coming of electronic-TDS.
A significant issue raised at the seminar was that when advertising agencies make payments to the media are they required to be charged separately for TDS?
According to the interpretation, when the advertiser pays the advertising agency, he has to deduct one per cent as TDS. But then advertising agencies required to pay TDS on advertising commission?
It being, if the advertising agency and the media share a principle to principle relationship then TDS does not come into play, although if they share a principle to agent relationship then TDS has to be imposed. So the commission garnered by the advertising agency has to first be defined as to whether it is a trade discount or a commission. The decision is yet to be made although thoughts on this were invited by the chief commissioner so as a mutual decision could be arrived at.
Looking at where the tax information network (TIN) is moving this year, the national securities depository LTD (NSDL) has been entrusted the responsibility of TIN, the system scalable to offer easy access to tax administration and tax payers. Tax payers will be provided the facility of accessing TIN through a secure and confidential permanent account number (PAN) based identification to ascertain tax payments credited to their account and the status of their returns and refunds.
The seminar – which was conducted by Senior Officers from the Office of the Commissioner of Income Tax (TDS), Mumbai proved useful and educative not only for finance / accounts people in advertising agencies but as well as for senior officers of CIT (TDS) as they not only addressed concerns about TDS but also demonstrated e-TDS filing and other recently introduced procedures and developments.
Brands
Estée Lauder to shed 10,000 jobs as new boss bets on digital shift
The cosmetics giant raises its profit outlook but stays silent on a possible merger with Spain’s Puig, as job cuts deepen and a three-year sales slump weighs on the turnaround
NEW YORK: Stéphane de La Faverie is not done cutting. Estée Lauder announced on Friday that it plans to eliminate as many as 3,000 additional jobs, taking its total redundancy programme to as many as 10,000 roles, up from a previous target of 7,000 announced a year ago. The company, which owns La Mer, The Ordinary, Tom Ford, and Aveda, employs roughly 57,000 people worldwide. The mathematics of what is now being contemplated is stark.
The fresh round of cuts is expected to generate a further $200 million in savings, bringing the total annual savings from the programme to as much as $1.2 billion before taxes. That money, De La Faverie has made clear, will be ploughed back into the turnaround.
A CEO in a hurry
De La Faverie, who took the helm in January 2025, inherited a company that had endured three consecutive years of annual sales declines. His response has been to move fast and cut deep. A significant portion of the latest redundancies reflects his push to reduce headcount at US department stores, long a cornerstone of Estée Lauder’s distribution model but now a channel in structural decline. In their place, he is accelerating the shift toward faster-growing online platforms, including Amazon.com and TikTok Shop, a pivot that is reshaping not just where Estée Lauder sells but how it thinks about its customers.
The numbers are moving in the right direction
Despite the pain, there are signs the medicine is working. Estée Lauder raised its profit outlook for the remainder of the fiscal year, guiding for adjusted earnings per share in the range of $2.35 to $2.45, above analyst estimates and a notable step up from the $2.05 to $2.25 range it had guided for in February. Organic net sales growth is expected to come in at 3 per cent, the company said, at the high end of the range it set out in February.
The share price tells a mixed story. After De La Faverie took charge, the stock surged nearly 60 per cent, buoyed by investor optimism that a longtime company insider could finally arrest the decline. But 2026 has been rougher: the shares have fallen 27 per cent this year, weighed down by disappointing February results and the overhang of unresolved merger talks with Spanish beauty giant Puig Brands SA. The company gave no additional details about those discussions on Friday, leaving the market to guess.
Silence on Puig
The proposed tie-up with Puig remains the most consequential unknown hanging over Estée Lauder. A deal with the Barcelona-based group, which owns brands including Carolina Herrera and Rabanne, would reshape the global luxury beauty landscape. But with nothing new to say and a turnaround still very much in progress, De La Faverie is asking investors to trust the process.
Three years of sales declines, 10,000 job cuts, and a merger that may or may not happen. At Estée Lauder, the overhaul has barely started.
