Today Taxmantra would discuss about whether service tax is applicable for advertising agencies or not. Further to budget 2012, there are some significant changes that would relate to the advertising agencies. Budget 2012 has brought about significant changes in propositions of Finance Act, 1994 relating to Advertising Agency Services. The Central Government, being satisfied that it is necessary in the public interest to do so, hereby exempts some taxable services  from the claws of service tax leviable thereon under section 66B .And some of the mammoth changes are highlighted as follows –

“Advertising Agency” includes – any person engaged in providing any service connected with the making, preparation, display, or exhibition of advertisement and includes an advertising consultant.

“Advertisement” includes any notice, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means or light, sound, smoke or gas.

This service of advertising agencies was made taxable from 1st November 1996 but from financial year 2012 – 2013 this service is no more covered under taxable services.Earlier the service tax in which any service provided or to be provided to any person, by an advertising agency in relation to advertisement, in any manner was taxable service.

Service Provider– Ad Agencies

Service Receiver– Any Person

Surprisingly, from financial year 2012 – 2013 both service provider and service receivable are not liable to pay service tax on advertising agency’s service, putting all the other service providers unglued.