SERVICE TAX TRADE NOTICE 14/2001                                                09.11.2001

Sub.: Value of Taxable Service in respect of Broadcasting Services - Communication of Board's Instructions - Regarding.

Board's letter F.No.341/43/2001 - TRU Dated 18.10.2001, on the above subject is communicated herewith for
information and necessary action.

(Issued from File C.No.IV/16/304/2001 S.Tax Part II)

/SD/

(V.M. BASHEER AHMED)

ASSISTANT COMMISSIONER

CHENNAI III

To

As per mailing list (Both Trade and Dept)

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Copy of Board's letter F.No.341/43/2001 TRU Dated 18.10.2001.

I am directed to say that doubts have been raised as to whether the "value of taxable service" in respect of
broadcasting services will include the commission paid by the broadcasting agency to the advertising
agency or not. The facts of the case are as follows.

2.In the invoices raised by the broadcasting agency on the advertising agency, the gross amount for
the broadcasting services is indicated. From this amount, the commission or discount (usually 15%
of the gross amount) given to the advertising agency is deducted and the net amount payable by the
advertising agency to the broadcasting agency is indicated. Thus what is "received by the
broadcasting agency" for the service rendered is the net amount excluding the commission or
discount. In some cases, only the net amount is invoiced to the advertising agency.

3.The matter has been examined by the board. The Value of taxable service is the amount received by
the broadcaster for providing the broadcasting service. Therefore, Service Tax is leviable only on the
amount received by the broadcaster for the services rendered. Since the amount received by the
broadcaster is net of the commission or discount paid to the advertising agency, service tax will be
payable on this amount. However, such abatement towards commission/discount shall be allowed
only when the same is clearly indicated in the invoice/bill raised by the broadcasting agency on the
advertising agency. It will be relevant to mention here that on the commission/discount received by
the advertising agency, service tax is seperately leviable under the category of advertising services.
In this regard, your attention is invited to Board's circular F.No.341/43/96 - TRU Dated 31.10.1996
wherein it was clarified that the commission received by the advertising agency for getting the
advertisement published in the print media (i.e. newspaper, periodicals, etc.) or the electronic media
(Doordarshan, Private Channels, AIR, etc.) will be includible in the value of taxable service under
the category of the "advertising service".