SPONSORSHIP SERVICE
Date of Introduction: 01.05.2006 vide Notification No.15/2006 dated 25.04.2006
Definitions:
“sponsorship” includes naming an event after the sponsor, displaying the sponsor’s company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition; but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the condition that the service provider is under no obligation to provide anything in return to such donors; (section 65(99a) of Finance Act, 1994)
“taxable service” means any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of sports events;
Value of Taxable Service:
The value of taxable service shall be the gross amount charged by the service provider for providing such service and the money value of any other consideration ( if any) received for providing such service. The value of taxable service shall be determined as per the provisions made under section 67 of the Finance Act, read with Service Tax (Determination of Value ) Rules, 2006
Who is responsible to pay Service Tax:
In case of sponsorship service provided to any body corporate or firm, the body corporate or firm, as the case may be, who receives such sponsorship service is responsible to pay service tax. (Ref.: Notification No.36/2004 dated 31.12.2004 as amended by Notification No.16/2006 dated 25.04.2006 and Rule 2(1)(d)(vii) of Service Tax Rules, 1994
Scope of Service:
Body corporates or firms involved in business or commerce sponsor events with an intent to obtain commercial benefit or bringing their name or products or services in public image to public attention by associating with a popular or successful event. This is an alternate form of advertisement. Consideration is normally paid in return for naming of the event after the sponsor or displaying the sponsoring company’s logo or trading name or giving the sponsor exclusive or priority booking rights. Service tax is leviable only when the sponsor is any body corporate or firm. Sponsorship of sports events is excluded from the scope of this levy. Service tax is collected under reverse charge method from the recipient of service namely the body corporate or firm who sponsors the event. It may be noted that the organizers of events are not liable to pay service tax under sponsorship service.
(Ref: Joint Secretary (TRU)’s letter D.O.F.No. 334/4/2006-TRU dated 28.02.2006)
General Exemptions:
|
Sr.No. |
Notification No. |
Nature of exemption |
|
1 |
16/2002 |
Services provided to United nations or any International Organisation |
|
2 |
12/2003 |
Exemption to value of goods and material sold during the course of providing taxable service, subject to conditions laid down in the notification. |
|
3 |
4/2004 |
Service provided to a developer of Special Economic Zone or Unit located in SEZ |
|
4 |
6/2005 |
Exemption from service tax for taxable services upto gross value of Rs. 4 lakhs, in case of service providers whose gross turnover for the preceding financial year was less than Rs. 4 lakhs ( w.e.f 01.04.2005) |
This site is best viewed with Internet Explorer 5.0 and above with 800 X 600 pixels resolution