MARKET RESEARCH AGENCY

Date of Introduction: 16.10.1998 vide Notification No.53/98-ST dt. 07.10.1998.

Definition:

“Market research agency” means a commercial concern engaged in conducting market research in any manner, in relation to any product, service or utility, including all types of customized and syndicated research services. (Section 65(41) of Finance Act, 1994 as amended)

Market research includes research based services in respect of consumer markets, industrial marketing, business to business marketing, social and rural marketing, etc. and is based on the requirements of the client. Such research services may be carried out by various techniques and may take the form of brand and advertising research.  Such market research services include studies such as, strategic research & brand positioning development, new product development research, creating development research, brand name, logo, pack label research, corporate image, diagnostic market research, customer research, etc.  Therefore, the market research services are of a very diverse nature and of a very wide variety. (Ministry’s F.No.B-11/3/98 TRU dt. 07.10.1998)

Taxable events and scope of service:

Taxable service means any service provided to a client, by a market research agency in relation to market research of any product, service or utility, in any manner.

(Section 65(72)(y) of Finance Act, 1994 as amended)

Market research agency providing the service to the advertising agencies, who have commissioned its services on behalf of the client, required paying Service Tax on services rendered by it to an advertising agency. The advertising agency would also liable to pay Service Tax on the amount billed to its client, but for advertising services.

The Service Tax is payable on all taxable services rendered in India, whether to an Indian or foreign client.

(Ministry’s F.No.B-11/3/98-TRU dt. 07.10.1998)

Value of Taxable Service:

Value of the taxable service shall be the gross amount charged by such agency for services rendered in connection with market research of any product, service or utility in any manner.

(Section 67 of Finance Act, 1994 as amended)

Exemption and Exclusion:

1. Out of pocket expenses which are reimbursable on actual basis, such as travelling, Boarding and Lodging expenses are not includible in the value for levy of Service Tax. The assessee is required to produce documentary evidence for the purpose.

(Ministry’s F.No.B-11/3/98 TRU dt. 07.10.1998)

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