Service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2011 Sponsorship received as 50% in cash and 50% in kind, Does it attract Service tax and how does it will be calculated

CMA Ashutosh Kumar Gupta

CMA Ashutosh Kumar Gupta (Expert)
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15 October 2011 Pl. elucidiate your point-which sort of sponsorship.
Usually sponsorship is not the service but a sort of business promotion activity payment in return of something from the proposer.

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Expert)
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15 October 2011 In my opinion, Service tax is applicable on 'sponsorship service' under reverse charge basis i.e. the person making payment for sponsorship will be leviable to pay service tax to government as similar in case of GTA service. For levy both payment in cash as well as in kind will be taken into account as per Section 67 of Finance Act, 1994

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ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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15 October 2011 Sorry..The service tax liability is in the hands of the person who receives the service/money and not who pays.

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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15 October 2011 If you have received the sponsor 50% in cash and 50% in kind then you need consider both cash & kind to calculate the service tax liability.

CMA Ashutosh Kumar Gupta

CMA Ashutosh Kumar Gupta (Expert)
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15 October 2011 Sponsor getting in turn exclusive booking rights, etc. in the case of an event is covered for service tax, further body corporate or firms are covered but not individuals, sports sponsorship is also not covered.
It is to be seen case by case the matter/crux of such sponsorship, nature, event and treatment to clearly determine whether service tax is applicable or not HENCE unless full facts of the case are stated it would be difficult to opinion exactly whether service tax is applicable or not, merely theoratically looking at the scenario may be avoided.

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Expert)
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16 October 2011 Fully agreed with Ashok Sir. It is true that service tax liability lies on person who is receiving payment. But Sponsorship service is an exception where service receiver is liable to pay service tax under Rule 2 (1)(d)(vii)of Service Tax Rules, 1994. Further, now sports sponsorship has also been covered under tax net.