Selling of space or time slots for advertisements - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 7 Selling of space for advertisements Effective date: 1.7.2012 Scope of Negative Service Section 66D(g) From 1.7.2012 to 30.9.2014 Selling of space or time slots for advertisements other than advertisements broadcast by radio or television From 1.10.2014 Selling of space for advertisements in print media. Notes: for Amendment w.e.f. 1.10.2014 The scope of this entry underwent a drastic amendment made by Finance Act, 2014 . Before amendment, selling of space other than radio or television was covered under this entry, but after amendment only selling of space in print media is exempt. It means now every type of selling of space for advertisements by way of hoardings, in airports, malls, theatres, in mobile, in internet etc. will be out of this entry. Meanings and Definitions: Section 65B(2) - advertisement means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person; Section 65B(1) - actionable claim shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882; Section 65B (25) - goods means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; Section 65B(33) - money means Indian legal tender, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any such similar instrument when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value; Section 65B(43) - securities has the meaning assigned to it in clause (h) of section 2 of the Securities Contract (Regulation) Act, 1956; (42 of 1956.) Section 65B (39a) - print media means,- (i) 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; (ii) newspaper as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867(25 of 1867); Clarification by the Board (Taxation Guide Guidance Note 4 Exemptions dated 20.06.2012) 4.7.2 Would services provided by advertisement agencies relating to preparation of advertisements be covered in the negative list entry relating to sale of space for advertisements? No. Services provided by advertisement agencies relating to making or preparation of advertisements would not be covered in this entry and would thus be taxable. This would also not cover commissions received by advertisement agencies from the broadcasting or publishing companies for facilitating business, which may also include some portion for the preparation of advertisement. 4.7.3 In case a person provides a composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement how will its taxability be determined? This would be a case of bundled services taxability of which has to be determined in terms of the principles laid down in section 66F of the Act . Bundled services have been defined in the said section as provision of one type of service with another type or types of services. If such services are bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. If such services are not bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which attracts the highest liability of service tax. 4.7.4 Whether merely canvassing advertisement for publishing on a commission basis by persons/agencies is taxable? Yes. These services are not covered in the negative list entry.