08 August, 2014

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The government has got a new source of revenue now. Advertisement is an ever growing industry. Realising the swift pace at which this industry is shooting towards north, the Union Finance Minister, Arun Jaitely, has introduced key amendments in section 66D (g) of the Finance Act 1994, as amended by Finance Act  2014. “It is necessary to prune the negative list and exemptions to the extent possible,” Jaitley said. This shall increase the hole in the pockets of the common man, as service tax on advertisement shall add to the cost of the products, which shall be ultimately recovered from the final consumer. This amendment shall come into effect on a date to be notified after the Finance (No. 2) Bill, 2014 receives the assent of the President.   

It is noteworthy that Finance (No.2) Bill, 2014 has received its Assent from President of India on 6th August,2014. Yet the provision of applicability of service tax on advertisement shall apply only after a formal notification is duly issued.


Under the previous law advertisements in only broadcast media namely radio and television were taxable. But   the   purview of   the   same    has      increased to many other advertisement medias. The following table gives you a broad idea of the same. The table informs you those areas where advertising up till now was not charged to service tax, but the same is done now.

Key point:
Areas where advertising was neither taxable earlier nor is taxable under the new law are:
    • Print media such as newspapers.*
    • Books other than business directories, yellow pages and trade catalogues.

*New definition of 'Print Media' has been included in section 65B. Print media means 'Book' and 'Newspaper' as defined in Press and Registration of Books Act, 1867.
  • "Book" includes every volume, part of division of a volume, and pamphlet, in any language, and every sheet of music, map, chart of plan separately printed.
  • "Newspaper" means any printed periodical work containing public news or comments on public news.
Before parting away.. it is essential to note that as usual the effect of the above amendment will have crucial implications on costings of media houses and units dependent on media houses.
Further the reverse charge implications on advertisements services on major social networking website like facebook, linkedln, google+ etc are worth a due attention.

About the Author:

CA Ankit Gulgulia (Jain)

Author is Practicing Chartered Accountant in New Delhi/NCR and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulgulia@gmail.com or at +91-9811653975

Assisted by Ms. Mansi Gupta
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