Service Tax on Advertising Agency

[pankaj sharma]

 

Dear Sir,

 

My client is an advertising agency located in mumbai, while charging service tax on its invoice amount it claims abatement of 85% and charges service tax only on 15% of the invoice.While going through service tax provisions and notification, I couldnt find any such provision.I also confirmed with one of the other unrelated advertising agency in mumbai and they too are claiming the abatement.Please provide me with the material if anyone has the same or any clarification on the matter.

 

Thanking you in advance

 

Regards

CA Pankaj Sharma

Mumbai

[Vikram Khaitan]

Dear Pankaj,

 

This is with reference to the query raised in the trailing mail.

 

In this regard, please note that no specific abatement has been granted in relation to valuation of taxable services provided by advertising agencies.

 

Generally, advertising services involves space booking, production and design layout etc (the three limbs that go into an advertising contract in its entirety) and in such a case of composite contract, the value of materials consumed in the process of performance of the work should be excluded from the purview of service tax. In terms of the contract entered into with the client, the advertising agency may be charging advertising commission (i.e. service portion) at a certain percentage of the value of the contract (say 15%) for purposes of service tax. However, perusal of the contract for ascertaining the exact service tax liability needs to be carried out.

 

Prima facie, no specific abatement is available to advertising agencies.

 

In case you require any further clarification, please let me know.

 

Thanks & Regards,

 

CA Vikram Khaitan

Director-ARV Advisory Services (P) Ltd.

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D: +91-33- 2213 7625 / 3022 4196; M: +91-98315 86568

Email: vik...@arvsolutions.co.in / in...@arvsolutions.co.in

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[SAURABH MODI]

Dear Sir, I am attaching herewith a word document which contains the services on which abatement is available.

 

As far as Negative List is concerned, service provided by selling of time or space slots for advertisement other than advertisements broadcast by radio and television is covered in the list.

 

hope this information might help you.

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forum4ca is a Google Group of eServe online for the benefit of CA and other professionals. It is especially meant for written discussion & circulate information within group members. The mail may contain such research/advice/opinion/information/fact provided by any member and are subject to the accuracy and of the description of facts.The forum4ca, do not claim that contains in mail/information obtained after reading as a complete and accurate disclosure of relevant facts. Further this Group’s Owner/Moderator/Member are not liable for any damages or costs suffered due to action/transaction based on information on this Group.
 
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Regards

 

Saurabh Modi