Sponsorship service provided to Government institute

[Asked by Guest]

Dear Sir,

We are a mfg co, If we are Sponsoring any Government recognized institute only our company logo will be displayed in such conference. So as a body corporate, are we liable to pay service tax under reverse charge mechanism,please explain, thanks and regards.

[Mahir S]

Yes Sir, under reverse charge mechanism you shall be under obligation to pay full service tax on the sponsorship amount and without any abatement thereof.

As per Notification 25/2012 ( The Mega Exemption Notification ), only following services are exempt :-

Services by way of sponsorship of sporting events organized,-
(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All IndiaSports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;
(c) by Central Civil Services Cultural and Sports Board;
(d) as part of national games, by Indian Olympic Association; or
(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

 

AI Summary

Reverse charge liability requires sponsors to pay full service tax on sponsorships, subject only to narrow sporting exemptions.
A corporate sponsor who pays for logo display is liable under the reverse charge mechanism to pay full service tax on the sponsorship amount without abatement, except where Notification 25/2012 expressly exempts sponsorship of specified sporting events organized by listed national sports bodies, university and school sports bodies, the Indian Olympic Association for national games, or under the designated rural youth sports scheme.