Saturday, March 1, 2014

Service tax on advertisement

1.      Advertisements

1.1.     Definition of advertisements:
As per section 65B(2) of the act, advertisement means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.

1.2.     Negative list entry:
As per section 66D(g) of the act, selling of space or time slots for advertisements other than advertisements broadcast by radio or television would be exempt from service tax.

1.3.     Clarification by CBEC:
Taxability of advertisement: as per Guidance notes on service tax issued by CBEC on 20th June, 2012, following services of advertisement would be taxable / exempt:

·        Sale of space or time for advertisement to be broadcast on radio or television, Sale of time slot by broadcasting organization, services related making or preparation of advertisement and commissions received from the broadcasting or publishing companies for facilitating business would be taxable.

·        Sale of space: Sale of space for advertisement in print media, Sale of space for advertisement in bill boards, public places (including stadia), buildings, conveyances, cell phones, automated teller machines, internet and Aerial advertising would not be taxable.

·        Composite advertisement service: A person provides a composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement, in such case taxability would be determine in terms of the principles of bundled services laid down in section 66F of the Act.
·        Merely canvassing advertisement for publishing on a commission basis by persons/agencies: it is taxable service.
Selling time slots for broadcasting any program: BBC world (India) P Ltd v. CST (2009) 20 STT 54 (CESTAT), service of selling of time slots for broadcasting of programme or obtaining sponsorship for programme and collecting broadcasting charges is a taxable service.


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