Service Tax Query -Imp Sponsor
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 May 2011
One of the Company , Now company is getting Sponsor for his event, as in case of Sponsorship Service Reciepent is liable to pay Service Tax.\
But the Company is not a Service Provider, therfore not registered, now if company is required to register under Service Tax , even for such one time Liability???
But the Company is not a Service Provider, therfore not registered, now if company is required to register under Service Tax , even for such one time Liability???
29 May 2011
here the liable to service tax means .....................pay service tax to event organizor/ provider.
he will get fees from sponsor and service tax from you .
he will get fees from sponsor and service tax from you .
Querist : Anonymous
Querist :
Anonymous
(Querist)
31 May 2011
In case of Sponsorship Service, Service Reciepent is Taxable, not Service Provider??
24 July 2025
Great question! Sponsorship service under Service Tax has some nuances, so let's clarify:
---
## **Service Tax on Sponsorship Services — Who Is Liable?**
### 1. **Basic Concept:**
* Sponsorship service means when a company (the sponsor) provides money or support in return for advertising, promotion, or association with an event, person, or organization.
* According to Service Tax law (pre-GST), **Sponsorship service is taxable**, but the **service recipient** (the entity receiving the sponsorship) is liable to pay service tax, **not the sponsor**.
---
### 2. **Scenario:**
* Your company is organizing an event.
* Another company (the sponsor) pays you money as sponsorship.
* You are the **service provider** (providing the platform, event, or promotion).
* The sponsor is the **service recipient** (receiving advertising/promotion services).
---
### 3. **Liability under Service Tax:**
* **The service recipient (Sponsor) is liable to pay service tax on the sponsorship amount under reverse charge mechanism (RCM).**
* Your company, as **service provider**, **does not charge service tax** on the sponsorship amount to the sponsor.
---
### 4. **Regarding Registration:**
* Since your company **is providing sponsorship services** (event organization), you are considered a **service provider**.
* You **must be registered under Service Tax** if your aggregate turnover crosses the threshold limit (usually ₹10 lakh per year).
* Even if it's a **one-time event**, if your taxable turnover exceeds the threshold, you are required to register.
* If your company is **only receiving sponsorship**, you **need not register as a service provider** for this service alone but may be liable under RCM to pay service tax if applicable.
---
### 5. **Summary Table:**
| Role | Liability to Pay Service Tax | Registration Requirement |
| --------------------- | --------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- |
| Event Organizer (You) | No tax charged on sponsorship received; but need to register if turnover exceeds threshold for other taxable services | Required if aggregate turnover > threshold |
| Sponsor | Pays service tax on sponsorship amount under RCM | Should be registered for paying tax under RCM |
---
### **Bottom Line:**
* **Sponsor pays service tax under RCM to government.**
* Your company does not collect service tax on sponsorship amount.
* Your company must register if total taxable turnover (including other services) exceeds threshold.
---
If your company is **not registered yet**, and this is your **only activity**, check your turnover; if below threshold, no need to register.
But if you have other taxable services or turnover crosses ₹10 lakh, registration is mandatory.
---
Would you like me to help draft a **sample letter/email** explaining this to your sponsor or tax department?
---
## **Service Tax on Sponsorship Services — Who Is Liable?**
### 1. **Basic Concept:**
* Sponsorship service means when a company (the sponsor) provides money or support in return for advertising, promotion, or association with an event, person, or organization.
* According to Service Tax law (pre-GST), **Sponsorship service is taxable**, but the **service recipient** (the entity receiving the sponsorship) is liable to pay service tax, **not the sponsor**.
---
### 2. **Scenario:**
* Your company is organizing an event.
* Another company (the sponsor) pays you money as sponsorship.
* You are the **service provider** (providing the platform, event, or promotion).
* The sponsor is the **service recipient** (receiving advertising/promotion services).
---
### 3. **Liability under Service Tax:**
* **The service recipient (Sponsor) is liable to pay service tax on the sponsorship amount under reverse charge mechanism (RCM).**
* Your company, as **service provider**, **does not charge service tax** on the sponsorship amount to the sponsor.
---
### 4. **Regarding Registration:**
* Since your company **is providing sponsorship services** (event organization), you are considered a **service provider**.
* You **must be registered under Service Tax** if your aggregate turnover crosses the threshold limit (usually ₹10 lakh per year).
* Even if it's a **one-time event**, if your taxable turnover exceeds the threshold, you are required to register.
* If your company is **only receiving sponsorship**, you **need not register as a service provider** for this service alone but may be liable under RCM to pay service tax if applicable.
---
### 5. **Summary Table:**
| Role | Liability to Pay Service Tax | Registration Requirement |
| --------------------- | --------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- |
| Event Organizer (You) | No tax charged on sponsorship received; but need to register if turnover exceeds threshold for other taxable services | Required if aggregate turnover > threshold |
| Sponsor | Pays service tax on sponsorship amount under RCM | Should be registered for paying tax under RCM |
---
### **Bottom Line:**
* **Sponsor pays service tax under RCM to government.**
* Your company does not collect service tax on sponsorship amount.
* Your company must register if total taxable turnover (including other services) exceeds threshold.
---
If your company is **not registered yet**, and this is your **only activity**, check your turnover; if below threshold, no need to register.
But if you have other taxable services or turnover crosses ₹10 lakh, registration is mandatory.
---
Would you like me to help draft a **sample letter/email** explaining this to your sponsor or tax department?
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