Service Tax on advertisement on foreign website

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This query is : Resolved

Abhishek (Querist)

08 May 2009 We are into a hotel industry. We have to pay charges for advertisement on foreign website. Now since the website is run in country other than India, Will it be termed as Services Used in India based on the fact that payment is to be made by establishment in India ??

If it will be covered under Import of Services under which provision it will be taxable ??

Also, the advertisement period is before 24th Feb 09, which rate of tax will be appliable in this case ??

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)

08 May 2009 If the establishment running the website is based on some foreign country, then procuring advertisement service from them would be construed as import of service under Sec 66A of Finance Act, 1994, and you would be liable for the payment of service tax under reverse charge method @ 12.36% as service was procured before 24.02.2009

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)

08 May 2009 If there services are provided and consumed outside India then there is no service tax liability otherwise it qualifies as import of service under Rule 3(iii) of Taxation of Services (provided from outside India and received in India) Rules, 2006.
The rate of service tax would be 12.36% if the services are provided before 24 of Feb 09.

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