Service tax on mobile games

This query is : Resolved

Neha (Querist)
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20 October 2013 My client launches games that are compatible with android based mobile devices.Presently, Game is free of cost for users. When users play game, some ads are displayed on screen for example ad of wechat. If the user click on that ad , my client receives income from google not from the person being advertised
Questions:

1. is this ad payment received from Google chargeable to service tax (as per me ads on internet are covered in negative list of service tax)
2.we are not aware where game is being played , who is the person being advertised, It is controlled by google who is our direct customer.It is also possible that if an indian entity is being advertised , it may be paying service tax under reverse charge on payment made to google

3. what will be implications when our game will become chargeable

Sanket

Sanket (Expert)
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20 October 2013 Finance Minister , in his budget 2012 speech,
announced that selling of space or time slots for
advertisements other than advertisements
broadcast by radio or television will be included
in the negative list and thus will be exempt from
the levy of service tax at the rate of 12 per cent.
The negative list currently comprises of 17
services and the mega exemption list covers an
additional 34 services.
As a consequence the sale of space for
advertisement in by mobile operators, VAS
providers, websites, blogs etc. on the Internet will
be exempt and would not attract any service tax

Sanket

Sanket (Expert)
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20 October 2013 However, Services provided by advertising
agencies and relating to making or preparation
of advertisements would not be covered in this
negative list and are still taxable at the enhanced
rate of 12%

Neha

Neha (Querist)
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21 October 2013 Thanks
Further could you please throw light on applicability of VAT/Service tax when our game will become chargeable

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