Service tax rate on advertisement

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Raushan Kumar

Raushan Kumar (Querist)
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03 February 2016 sir, what will be service tax charge on advertisement.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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03 February 2016 There is no Service Tax on Advertisement per se, but there is service tax on the sale of advertising time and space.

"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.

"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

"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 of 1867) but does not include business directories, yellow pages, and trade catalogues which are primarily meant for commercial purposes.

The rate of service tax is 14% of the consideration for each of the above services. With effect from 15th November 2015 Swatch Bharat Cess @ 0.5% of the consideration received.

However, consideration received as a Pure Agent shall be allowable in computing the taxable consideration. 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.

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