Introduction: Service Tax is started with three Services, but now slowly it covers all the limbs of services. In Every Budget one new service will be introduced. With effect from 1st May 2006, Sponsorship Service is introduced to cover the promotion of products or services, shows or award functions.
Definition: Sponsorship Service means which is provided or to be provided to anybody corporate or firm by any person receiving sponsorship, in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of Sports events.
With effect from 1-7-2010, Section 65(105)(zzzn) defining sponsorship service is drastically amended in the Finance Act, 2010 that taxable service means any service provided or to be provided to any person, by any other person receiving sponsorship, in relation to such sponsorship service, in any manner.
Analysis of Changes:
|
S.No |
Position before 1-7-2010 |
Position After 1-7-2010 |
|
1 |
Service provided to only body corporate or firm is covered |
Service provided to any other person is covered |
|
2 |
Sponsorship relating to spots events not taxable |
Sports events are taxable with some exemptions to specified tournaments or champion ships. |
What is sponsorship Service?
As per Section 65(99a) Sponsorship service includes the following viz..
1. Naming the event after the sponsor
2. Displaying the sponsor’s company logo or trading name
3. Giving the sponsor exclusive or priority booking rights
4. Sponsoring prizes or Trophies for competition
It specifically excludes any financial or other support in the form of donation or gift wherein service provider is under no obligation to provide anything in return to such donors.
Valuation:
The value of service is the gross amount charged for such service including any cost or expenditure incurred in connection with providing of the services.
Who needs to pay Service Tax?
According to Rule 2(1)(d) of the Service Tax Rules, the body corporate or firm which receives the service is liable to pay service tax, if any person other than this, then liability to pay service tax is on the Service Provider.
When to Pay Service Tax?
|
Status |
Basis |
Due Date for normal payment |
Due Date for e-payment |
|
Non-corporate entities like individual, proprietary ship, partnership firm |
Quarterly payment
(Apr-Jun, Jul-sep,
Oct-Dec, Jan-Mar) |
5th of the month succeeding the relevant quarter in which the consideration was realized.
|
6th of the month succeeding the relevant quarter in which the consideration was realized.
|
|
Corporate entities |
Monthly payment |
5th of the next month in which the consideration was realized.
|
6th of the next month in which the consideration was realized.
|
For the month of March due date for payment of service tax is 31st March.
Rate of Service Tax:
The rates of service tax will change time to time. The rate of service tax will summarized below.
|
Period |
Service Tax |
Education Cess |
SHE .Cess |
Total Rate |
|
16.08.2002 to 31.05.2003 |
5% |
- |
- |
5% |
|
14.05.2003 to 09.09.2004 |
8% |
- |
- |
8% |
|
10.09.2004 to 18.04.2006 |
10% |
2% |
- |
10.2% |
|
19.04.2006 to 10.05.2007 |
12% |
2% |
- |
12.24% |
|
11.05.2007 to 23.02.2009 |
12% |
2% |
1% |
12.36% |
|
24.02.2009 to till date |
10% |
2% |
1% |
10.3% |
How to pay Service tax?
Payment of service tax must be through GAR-7 challan and through designated branches.GAR-7 Challan and list of designated branches will be available in the CBEC web site. www.cbec.gov.in or www.aces.gov.in.
Benefit of Cenvat Credit:
Cenvat credit is a concept introduced to overcome cascading effect of indirect taxes. Because of the cascading effect assessee is paying tax more than one time for the same goods and services. Cenvat Credit is nothing but adjusting the tax already paid which included in the current tax.
The service provider providing taxable services is entitled to avail CENVAT credit of the service tax paid on
1. Inputs
2. Capital goods and
3. Input services
Those must be used for providing taxable services.
RECENT AMENDMENT:
Specific Exemptions: Notification 30/2010-ST dated 22-06-2010 provides exemption for sponsoring the under mentioned;
1. Tournaments or championships organised by any of the National Federations or Federations affiliated to such National Sports Federations, where the participating teams or individuals represent any District, State or Zone.
2. Organised by Association of Indian Universities-Inter-University Sports Board, School Games Federation of India, All India Council for Deaf, Paralympic Committee of India(for physically challenged), Special Olympics Bharat(for mentally challenged)
3. Organised by the Central Civil Services Cultural and Sports Board.
4. Organised as a part of National Games, by the Indian Olympic Association.
5. Organised under Panchayat Yuva kreeda Aur Khel Abhiyan Scheme.
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