Digital Inspiration: Amit Agarwal of Digital Inspiration reports that the Union Budget 2006-07 has included Adsense Publishers in India in the service tax net. The service tax in India has been increased to 12 per cent in the recently announced Budget.
The Indian Finance Bill of 2006 clearly states that sale of space for advertisement in places other than the print media will attract a 12% service tax. This includes providing space for display, advertising, showcasing of any product or service on Internet.
THE FINANCE BILL, 2006 says:
For the purposes of this sub-clause, “sale of space or time for advertisement” includes,-
(i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;
In an earlier ruling, the Authority for Advance Ruling in the Union Finance Ministry had said that Google India had to pay service tax as its activity of selling space on its site is tantamount to providing a service to advertisers and clients. Therefore Google India will have to pay service tax for selling advertisement space on its search site to Indian entities.
Google India Told To Pay Service Tax For Advertisements