Service tax is not applicable on selling of space for advertisement in print media as per entry

(g) of section 66D. However, in the instant case, the transaction is of commission on sale of
space for advertisement in print media which is service by mediator or agent. Hence, it is not
get covered under this entry. If News paper company is providing service directly then it can get
covered in this entry. So, service tax would be applicable in the instant case. However, it may
be noted that Chapter V of the Finance Act, 1994 is not applicable to the state of Jammu and
Kashmir. Disagree with the above opinion. Even in the case of J&K ST is leviable. Regards
Karanjit Singh | +91-7503588224 Reply a year ago kumar bharosa nandan Follow 2
The Party is rendering taxable service under the category of "advertising agency service". The
'advertising agency' entered into contract with their clients for providing "advertisement agency
service". The 'Advertising agent' render 'advertising agency service' to various clients in the
form of creative agency wherein, they create advertisement by themselves or their third party
media agency wherein, they do media printing and/ or buying for advertisement to be published
in print/electronic media. They are receiv``````````````````````````````````````````ing 15% Agency
Commission from authorized Broadcasting and Print media as the case may be. In such a
case, a person or an organization (say, ABC Ltd.) who want to advertise their product
approaches an 'Advertising agency'. Therefore ABC Ltd. want to avail the services of the
'Advertising agency' becomes the client of the 'advertising agency'. In other words, the
'Advertising agency' is the Service Provider whereas ABC Ltd. becomes the Service Receiver.
The advertisement can be done in various ways either through Print Media or through Radio or
Television, etc. In order to fulfil the requirements of his client (ABC Ltd.) the 'advertising agency'
being the service provider gets in touch with the appropriate media. In other words as far as the
'advertising agency' is concerned, its client is not the media. In this case the client of the
'advertisiing agency' is ABC Ltd. This aspect can be further supported with the fact that it is
ABC Ltd who is deducting the TDS under the Income Tax Act. This proves that the professional
service of 'advertising agency' iis being providfed by the 'Advertising agency' to ABC Ltd. The
media such as broadcasting agency charges the advertising agency for insertion of the
advertisement either in Print Media or in Television. In the present case, the media gives a
discount of 15% to the 'Advertising agency'. If the tariff rate is Rs. 100/, it is sufficient the
'Advertising agency' pay the media Rs. 85/ along with applicable Service tax. (Advertising
service by "Print media" is exempted) It can be easily noticed that the 'Advertising agency' has
not received any amount from the media nor the Media has paid any consideration to the
'Advertising agency'. The 'Advertising agency' has only availed the discount of 15% from the
MEDIA. Perhaps the word “Discount” is very often mis-construed as "Commission". It may be
understood here that "commission" is received if any service is rendered. In the instant case,
the "Advertising agent" has purchased the SPACE or TIME-SLOT for Advertisement, from the
Media. Hence, no service is rendered by the 'Advertsing Agency' to the media. Now for the
calculation of Service Tax, the gross amount received by the 'Advertising agency' (Service
provider) from ABC Ltd. will be the value of the taxable service. Moreover, as the consideration
(gross amount) received by the 'Advertising agency' has been shown as an Income in the Profit
& Loss A/c is sufficient to be charged with Service tax on the entire consideration received. The
arguement of the 'Advertiosing agency' that the maount of 85 percent which it pays to the
Media for the purchase of SPACE or TIME-SLOT (as the case may be) is claimed as
the reimbursement of the expenditure made by them is nullified as the said consideration has
been shown as an income in the Profit & Loss A/c. The exemption from the payment of service
tax is plausible under the "reimbursement" concept where the 'Advertisng agency' fulfills all of
the stipulations prescribed for the "pure agent" under Service Tax (Determination of Valuation)
Rules, 2006. Other than the above, if the 'advertsing agency' receives any consideration from
the Media as a COMMISSION for arranging/finding Customers for the Media in relation to their
Sale of SPACE or TIME-SLOT (as the case may be) , the said consideration amount received
by the 'Advertsing Agency' is also liable to Service Tax under the Taxable services of "business
auxilliary service". Note: (a) The activity of "Selling of SPACE or TIME-SLOTS for
advertisements" is distinct from the "ADVERTSING AGENCY" Service. (b) While the former
is classified under sub clause (105)(zzzzm) of Section 65 of the Finance Act, 1994 the latter is
classified under (105)(e) of Section 65 of the Finance Act, 1994. (c) The activity of the
MEDIA is "Selling of SPACE or TIME-SLOTS for advertisements" (d) The activity of the
'Advertising agency' is to make necessary arrangements to have the "matter" of its client
advertised in the Media. The activity of the 'Advertising agency' comprises of designing,
conceptualising, developing the 'matter for advertisement' to its requiired shape, size, etc and
booking/purchasing of SPACE or TIME-SLOT from the Media as the case may be to get the
'matter of advertisement' advertised. Regards, Wise Man ( 9853749281 )

Read more at: https://www.caclubindia.com/forum/service-tax-on-advertising-agency-of-print-

media-newspaper--361869.asp

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?

Taxable Non-taxable

Sale of space or time for Sale of space for advertisement in print media
advertisement to be broadcast on
radio or television

Sale of time slot by a broadcasting Sale of space for advertisement in bill boards, public
organization. places, buildings, conveyances, cell phones, automated
teller machines, internet

Aerial advertising
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
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?

Taxable Non-taxable

Sale of space or time for Sale of space for advertisement in print media
advertisement to be broadcast on
radio or television

Sale of time slot by a broadcasting Sale of space for advertisement in bill boards, public
organization. places, buildings, conveyances, cell phones, automated
teller machines, internet

Aerial advertising
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