(2) Advertisement-sale of Space or Time Services
A. Date of introduction:
01.05.2006 vide Notification No. 15/2006 - ST dt.24.04.2006
B. Definition and scope of service:
"Advertisement" includes any notice,
circular, label, wrapper, document, hoarding or any other audio or visual
representation made by means of light, sound, smoke or gas.
(Section 65(2) of
Finance Act, 1994 as amended)
"Sale of space or time for advertisement"
for the purpose of section 65(105) (zzzm), includes,-
(i) providing space or time, as the case may
be, for display, advertising, showcasing of any product or service in video programmes, television programmes
or motion pictures or music albums, or on bill-boards, public places, buildings,
conveyances, cell phones, automated teller machines, internet;
(ii) selling of time
slots on radio or television by a person, other than a broadcasting agency or
organization; and
(iii) aerial advertising
(Section 65(105)(zzzm) of Finance Act, 1994 as
amended)
"Print media" for the purpose of
section 65 (105) (zzzm), means,-
(i)
"newspaper"
as defined in sub-section (1) of section 1 of the Press and Registration of
Books Act, 1867 (25 of 1867)
(ii)
"book" as defined in sub section (1) of section 1 of the Press and Registration of
Books Act, 1867 (25 of 1867) but does not include business directories, yellow
pages, and trade catalogues which are primarily meant for commercial purposes.
(Section 65(105)(zzzm) of Finance Act, 1994 as
amended)
"Taxable
service"
means any service provided or to be provided to any person, by any other
person, in relation to sale of space or time for advertisement, in any manner;
but does not include sale of space for advertisement in print media and sale of
time slots by a broadcasting agency or organization.
Explanation
1.- For
the purpose of this sub-clause, "sale of space or time for advertisement"
includes, -
(i) providing space or time, as the case may be,
for display, advertising, showcasing of any product or service in video programmes, television programmes
or motion pictures or music albums, or on bill boards, public places,
buildings, conveyances, cell phones, automated teller machines, internet;
(ii) selling of time
slots on radio or television by a person, other than a broadcasting agency or
organization; and
(iii) aerial advertising
Explanation
2.- For
the purposes of this sub-clause, "print media" means,-
(i) "newspaper" as
defined in sub-section (1) of section 1 of the Press and Registration of Books
Act, 1867 (25 of 1867);
(ii) "book" as defined in sub-section (1) of
section 1 of the Press and Registration
of Books Act, 1867 (25 0f 1867), but does not include business directories,
yellow pages and trade catalogues which are primarily meant for commercial
purposes.
(Section 65(105)(zzzm) of Finance Act, 1994 as
amended)
C. Rate of
Tax & Accounting Code:
|
Rate of Tax
|
Accounting Code
|
Service
Tax
|
10% of the value of
services
|
00440354
|
Education
Cess
|
2% of the service
tax payable
|
00440298
|
Secondary and H.
Education Cess
|
1% of the service
tax payable.
|
00440426
|
Other - Penalty / interest
|
As levied or
applicable
|
00440355
|
(Rate of tax is
effective from 24.02.2009.)
D. Classification of Taxable Services:
(1) The classification of taxable services shall
be determined according to the terms of
the sub-clauses (105) of section 65;
(2) When for any reason , a taxable service is
prima facie, classifiable under two or more sub-clauses of clause (105) of
section 65, classification shall be effected as follows :-
(a) the sub-clause which provides the most specific description
shall be preferred to sub-clauses providing a more general description;
(b) composite
services consisting of a combination of different services which cannot be
classified in the manner specified in clause (a), shall be classified as if
they consisted of a service which gives them their essential character, in so
far as this criterion is applicable;
(c) when a service cannot be classified in the manner specified
in clause (a) or clause (b), it shall be classified under the sub-clause which
occurs first among the sub-clauses which equally merits consideration.
(Sec.65A of Finance
Act, 1994)
E. Valuation of taxable services for
charging Service tax
(1) Service tax chargeable on any taxable service
with reference to its value shall,-
(i) in a case where
the provision of service is for a consideration in money, be the gross amount charged
by the service provider for such service provided or to be provided by him;
(ii) in a case where the provision of service
is for a consideration not wholly or partly consisting of money, be such amount
in money, with the addition of service tax charged, is equivalent to the
consideration;
(iii) in a case
where the provision of service is for a consideration which is not
ascertainable, be the amount as may be determined in the prescribed manner.
(2) Where the gross
amount charged by a service provider, for the service provided or to be
provided is inclusive of service tax payable, the value of such taxable service
shall be such amount as, with the addition of tax payable, is equal to the
gross amount charged.
(3) The gross amount
charged for the taxable service shall include any amount received towards the
taxable service before, during or after provision of such service.
(4) Subject to the
provisions of sub-sections (1), (2) and (3), the value shall be determined in
such manner as may be prescribed.
Explanation.-For the purposes of this section,-
(a) "consideration" includes any amount that is payable for the
taxable services provided or to be
provided;
(b) "money" includes
any currency, cheque, promissory note, letter of
credit, draft, pay order, travellers cheque, money order, postal remittance and other similar
instruments but does not include currency that is held for its numismatic
value;
(c) "gross amount
charged" includes payment by cheque, credit card,
deduction from account and any form of payment by issue of credit notes or
debit notes and 'book adjustment, and any amount credited or debited, as the
case may be, to any account, whether called "Suspense account" or by any other
name, in the books of account of a person liable to pay service tax, where the
transaction of taxable service is with any associated enterprise.
(Sec.67 of Finance Act, 1994)
Inclusion in or Exclusion from value of certain expenditure or cost:
(1)Where any expenditure or costs are
incurred by the service provider in the course of providing taxable service,
all such expenditure or costs shall be treated as consideration for the taxable
service provided or to be provided and shall be included in the value for the
purpose of charging service tax on the said service.
[Rule 5(1) of Service
Tax (Determination of Value) Rules, 2006]
(2) The expenditure or costs incurred by the
service provider as a pure agent of the recipient of service shall be excluded
from the value of the taxable service if all the following conditions are
satisfied, namely:-
(i) the service provider acts as a pure agent of the recipient
of service when he makes payment to third party for the goods or services
procured;
(ii) the recipient of
service receives and uses the goods or services so procured by the service
provider in his capacity as pure agent of the recipient of service;
(iii)
the
recipient of service is liable to make payment to the third party;
(iv) the recipient of
service authorizes the service provider to make payment on his behalf;
(v) the recipient of
service knows that the goods and services for which payment has been made by
the service provider shall be provided by the third party;
(vi) the payment made
by the service provider on behalf of the recipient of service has been
separately indicated in the invoice issued by the service provider to the recipient of
service;
(vii) the service provider recovers from the
recipient of service only such amount as
has been paid by him to the third party; and
(viii)
the goods or
services procured by the service provider from the third party as a pure agent
of the recipient of service are in addition to the services he provides on his
own account.
[Rule 5(2) of Service
Tax (Determination of Value) Rules, 2006)]
F. Clarifications issued by Board/Ministry
(1)
This entry levies service tax on sale of time or space for advertisement
excluding sale of space for advertising in print media. Sale of advertising time in television and
radio by any person other than broad costing agency or organization is also
covered under this sub-clause. Some of
the other modes of advertisement covered under this mode are internet
advertisement, advertisement on buildings, vehicles etc., advertisement in
motion pictures, television serials, video and music albums, mobile phones, ATMs,
films and television serials (known as product placement). It may be noted that
advertisement in print media is excluded.
{Please refer M.F.
(D.R.) letter D.O.F.No. 334/4/2006-TRU dated
28.02.2006}
(2)
Sale of space in yellow pages, business directories-
Definition of the term
"Book" as contained in Section 65 (105) (zzzm) (sale
of space or time for advertisement) has been amended by Finance Act, 2007
(w.e.f.01.06.2007) to exclude business directories, yellow pages and trade
catalogues which are primarily meant for commercial purposes from the
definition of ' book' scope.
Consequently sale of space for advertisement in such publications will
be liable to service tax under this service.
{Please refer M.F. (D.R.) letter D.O.F.No. 334/1/2007-TRU dated 28.02.2007}
G. Exemption & Exclusion:
1.Exemption to Small Scale Service Providers:
In exercise of the powers conferred by sub-section (1) of section 93 of the
Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance
Act), the Central Government, on being satisfied that it is necessary in the
public interest so to do, hereby exempts taxable services of aggregate value
not exceeding Ten lakh*
rupees in any financial year from the whole of the service tax leviable thereon under section 66 of the said Finance Act:
Provided that nothing contained in this notification shall apply to,-
(i) taxable services provided by a
person under a brand name or trade name,
whether registered or not, of another person; or
(ii)
such value of taxable services in respect of which
service tax shall be paid by such person and in such manner as specified under
sub-section (2) of section 68 of the said Finance Act read with Service Tax
Rules,1994.
2.
The exemption contained in this notification shall apply subject to the
following conditions, namely:-
(i) the provider of taxable service has the option not to
avail the exemption contained in this notification and pay service tax on the
taxable services provided by him and such option, once exercised in a financial
year, shall not be withdrawn during the remaining part of such financial year;
(ii)
the provider of taxable service shall not avail the CENVAT credit of service
tax paid on any input services, under rule 3 or rule 13 of the CENVAT Credit
Rules, 2004 (herein after referred to as the said rules), used for providing
the said taxable service, for which exemption from payment of service tax under
this notification is availed of;
(iii)
the provider of taxable service shall not avail the CENVAT credit under rule 3
of the said rules, on capital goods received in the premises of provider of
such taxable service during the period in which the service provider avails
exemption from payment of service tax under this notification;
(iv)
the provider of taxable service shall avail the CENVAT credit only on such inputs or input services received, on or after the
date on which the service provider starts paying service tax, and used for the
provision of taxable services for which service tax is payable;
(v)
the provider of taxable service who starts availing exemption under this
notification shall be required to pay an amount equivalent to the CENVAT credit
taken by him, if any, in respect of such inputs lying in stock or in process on
the date on which the provider of taxable service starts availing exemption under
this notification;
(vi)
the balance of CENVAT credit lying unutilised in the
account of the taxable service provider after deducting the amount referred to
in sub-paragraph (v), if any, shall not be utilised
in terms of provision under sub-rule (4) of rule 3 of the said rules and shall
lapse on the day such service provider starts availing the exemption under this
notification;
(vii)
where a taxable service provider provides one or more taxable services from one
or more premises, the exemption under this notification shall apply to the
aggregate value of all such taxable services and from all such premises and not
separately for each premises or each services; and
(viii)
the aggregate value of taxable services rendered by a
provider of taxable service from one or more premises, does not exceed rupees *ten lakhs in
the preceding financial year.
3.
For the purposes of determining aggregate value not exceeding ten*lakh
rupees, to avail exemption under this notification, in relation to taxable
service provided by a goods transport agency, the payment received towards the
gross amount charged by such goods transport agency under section 67 for which
the person liable for paying service tax is as specified under subsection (2)
of section 68 of the said Finance Act read with Service Tax Rules, 1994, shall
not be taken into account.
Explanation.- For the purposes of this notification,-
(A)
"brand name" or "trade name" means a brand name or a trade name, whether
registered or not, that is to say, a name or a mark, such as symbol, monogram,
logo, label, signature, or invented word or writing which is used in relation
to such specified services for the purpose of indicating, or so as to indicate
a connection in the course of trade between such specified services and some
person using such name or mark with or without any indication of the identity
of that person;
(B)
"aggregate value not exceeding *ten lakh rupees means the sum total of first consecutive
payments received during a financial year towards the gross amount, as
prescribed under section 67 of the said Finance Act, charged by the service
provider towards taxable services till the aggregate amount of such payments is
equal to ten lakh rupees but does not include
payments received towards such gross amount which are exempt from whole of
service tax leviable thereon under section 66 of the
said Finance Act under any other notification.
4.
This notification shall come into force on the 1st day of April, 2005.
[Notification No.
6/2005-ST, dated 1-3-2005. *Amended by Notfn.No.
8/2008-ST dated 01.03.2008]
2. Services to UN Agencies
Services provided to
United Nations or an International Organizations are exempt.
[Notification No.
16/2002-ST, dated 2-8-2002]
3. Export of service:
Any service which
is taxable under clause 105 of Section 65 may be exported without payment of
service tax.
(Rule 4 of Export of
Services Rules,2005)
4.Exemption to services provided to a
developer of SEZ or a unit of SEZ:
Exempts the taxable
services specified in clause (105) of section 65 of the said Finance Act, which
are provided in relation to the authorized operations in a Special Economic
Zone, and received by a developer or units of a Special Economic Zone, whether
or not the said taxable services are provided inside
the Special Economic Zone, from the whole
of the service tax leviable thereon under section 66
of the said Finance Act subject to certain conditions. (
Refer notification for details)
{ Notification No. 09/2009ST dated
03.03.2009 (Prior to 03.03.2009 Notfn.No4/2004-ST dated 31.03.2004)}
5. Exemption to value of goods & material
sold by service provider:
In exercise of the
powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the
Central Government, being satisfied that it is necessary in the public interest
so to do, hereby exempts so much of the value of all the taxable services, as
is equal to the value of goods and materials sold by the service provider to
the recipient of service, from the service tax leviable
thereon under section (66) of the said Act, subject to condition that there is
documentary proof specifically indicating the value of the said goods and
materials.
(Notification No. 12/2003-ST dated 20.06.2003
effective from 01.07.2003)
6. Exemption to taxable services provided by TBI
and STEP:
All taxable services,
provided by a Technology Business Incubator (TBI) or a Science and Technology
Entrepreneurship Park (STEP) recognized by the
National Science and technology
Entrepreneurship Development Board (NSTEDB) of the Department of Science
and Technology, Govt. of India from the
whole of the service tax leviable thereon subject to certain conditions and
procedures. ( Refer notification for details)
(Notification
No.09/2007 ST dated 01.03.2007)
7. Exemption to taxable services provided by
entrepreneurs located within the premises of TBI or STEP:
All taxable services, provided by an
entrepreneur located within the premises
of a Technology Business Incubator (TBI)
or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and technology Entrepreneurship Development Board (NSTEDB)
of the Department of Science and Technology, Govt. of India from the whole of the service tax leviable thereon
subject to certain conditions and
procedures. ( Refer notification for details)
(Notification
No.10/2007 ST dated 01.03.2007)
8. Exemption to services provided to Foreign
Diplomatic Missions or Consular Post in India:
All
services provided by any person, for the official use of a Foreign Diplomatic
Mission or Consular Post in India are exempted from service tax subject to certain
conditions and procedures. (Refer notification for details)
(Notification No.
33/2007-ST dated 23.05.2007)
9. Exemption to services provided for personal
use of a family member of Diplomatic Agent or Career Consular Officers posted
in Foreign Diplomatic Mission/Consular Post in India:
All services provided by any person, for
personal use of family member of Diplomatic Agents or Career Consular officers
posted in a
Foreign Diplomatic Mission or Consular
Post in India are exempted from service tax subject to certain conditions and
procedures. (Refer notification for details)
(Notification No.
34/2007-ST dated 23.05.2007)
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