Selling of space or time slots for advertisements other than advertisements broadcast by radio or television is covered in Negative List for Service tax Purpose vide finance bill 2012 and its definition is as follows:-
‘Advertisement’ has been defined in section 65B of the Act as 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.
1 Sale of space of time for advertisements not including sale of space for advertisement in print media and sale of time by a broadcasting agency or organization is currently taxed under clause (zzzm) of sub-section (105) of the Finance Act,1994. So what kind of sale of space or time would become taxable and what would be not taxable?
|Sale of space or time for advertisement to be broadcast on radio or television||Sale of space for advertisement in print media|
|Sale of time slot by a broadcasting organization.||Sale of space for advertisement in bill boards, public places, buildings, conveyances, cell phones, automated teller machines, internet|
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 negative list 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.
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.
For guidance on how to determine whether or not a bundle of services is bundled in the ordinary course of business please refer to Taxability of bundled services under Service Tax