Taxability of Public Relation Services

[Dr. Sanjiv Agarwal]

Service tax has been imposed on public relation services by the Finance Act, 2006 with effect from 1st May, 2006 vide Notification No. 15/2006-ST dated 25.4.2006. The gross amount charged by any person to or total consideration received by a person in relation to public relation services is chargeable to service tax.

Meaning of Public Relation [Section 65(86c)]

Section 65(86c) (as inserted by Finance Act, 2006) defines ‘public relations’ as under –

“public relations” includes strategic counseling based on industry, media and perception research, corporate image management, media relations, media training, press release, press conference, financial public relations, brand support, brand launch, retail support and promotions, events and communications and crisis communications.

Public relations thus, includes strategic counseling based on industry, media and perception research, corporate image management, media relations, media training, press release, press conference, financial public relations, brand support, brand launch, retail support and promotions, events and communications and crisis communications.

Dictionary meaning of ‘public’ means ordinary people in general, the community, a section of community having a particular interest or connection, open to all the people. The word ‘relation’ means the way in which two or more concepts, objects or people are connected or feel about and behave with each other. The phrase, ‘public relation’ means the professional maintenance of a favourable public image by a company or other organization or a famous person, the state of the relationship between a company or other organization or a famous person and the public.

The definition is an inclusive definition including the following activities or services –

— Strategic counseling based on industry (in relation to public relation management).

— Media and perception research (normally undertaken by public relation agencies or advertising agencies but will not include market research.

— Corporate image management exercise or campaign.

— Media relations (developing, maintaining etc.)

— Media training.

— Press release (preparation, getting it published).

— Press conference (arranging, organizing and management).

— Financial public relations.

— Brand support and launch (not an event management exercise).

— Retail support and promotion (in any manner).

— Events and communications.

— Crises communication.

Public relation agencies are engaged to provide services relating to image or communication management.

Taxable Service

Section 65(105)(zzzs) defines taxable service as under —

Taxable service means any service provided or to be provided to any person, by any other person, in relation to managing the public relations of such person, in any manner.

Taxable service will include not only public relation service but also any service which is in relation to public relation management. This service can be provided in any manner either directly or indirectly. The service provider also need not be a commercial concern and any person can provide such service.

For taxable services, following conditions should be satisfied –

(a) services should be rendered by any person to other person.

(b) service rendered should be in relation to public relations.

(c) public relation services should be either in relation to public relation management, communication or counseling, as per definition.

(d) taxable services can be provided in any manner.

Person Liable

Any person providing public relation management services shall be person liable and treated as an assessee for service tax purposes.

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