Services provided by way of Sponsorship

Reverse charge on sponsorship services requires the recipient to bear service tax when a corporate or partnership receives the service.

Reverse charge applies to taxable services provided or agreed to be provided by way of sponsorship to a body corporate or partnership firm in the taxable territory, with the service provider having nil liability and the service recipient bearing the tax. Body corporate is defined by reference to the Companies Act and partnership firm includes LLP under the Service Tax Rules. The term sponsorship is not defined in Sec. 65B, though a prior statutory definition excluded donations or gifts where no obligation was owed by the service provider.