Service Tax On Advertising Takes Effect

The 5 per cent service tax applicable on advertising, courier and radio paging services "" which was part of the budget announcements "" came into force late last week, according to a revenue department notification.

All advertising agencies, courier agencies and paging services are required to collect tax on the services rendered by them on or after November 1 and deposit it in the Union government account.

In case of services relating to advertisement, the charges paid by the advertising agency to print and electronic media as cost of space or time is not to be included in the value of the service tax.

However, all expenses related to making or preparing the advertisements can be included in the value of the taxable service. The government has also clarified that the service tax does not apply to newspapers or the electronic media.

Express transport agencies, which provide door-to-door service for transport of goods or articles, are covered under the definition of courier agency and as such are liable to pay service tax.