1[Rule 3 - Apportionment of IGST with respect to advertisement services:-
The proportion of value
attributable to different States or Union territories, in the case of supply of
advertisement services to the Central Government, a State Government, a
statutory body or a local authority, under sub section (14) of
section 12 of the Integrated Goods and Services Tax Act, 2017, in the
absence of any contract between the supplier of service and recipient of
services, shall be determined in the following manner namely:-
(a) In the case of newspapers and publications, the amount
payable for publishing an advertisement in all the editions of a newspaper or
publication, which are published in a State or Union territory, as the case may
be, is the value of advertisement service attributable to the dissemination in
such State or Union territory.
Illustration: ABC is a government agency which deals with the all the
advertisement and publicity of the Government. It has various wings dealing with
various types of publicity. In furtherance thereof, it issues release orders to
various agencies and entities. These agencies and entities thereafter provide
the service and then issue invoices to ABC indicating the amount to be paid by
them. ABC issues a release order to a newspaper for an advertisement on 'Beti
bachao beti padhao', to be published in the newspaper DEF (whose head office is
in Delhi)for the editions of Delhi, Pune, Mumbai, Lucknow and Jaipur. The
release order will have details of the newspaper like the periodicity, language
, size of the advertisement and the amount to be paid to such a newspaper. The
place ofsupply of this service shall be in the Union territory of Delhi, and the
States of Maharashtra, Uttar Pradesh and Rajasthan. The amounts payable to the
Pune and Mumbai editions would constitute the proportion of value for the state
of Maharashtra which is attributable to the dissemination in Maharashtra.
Likewise the amount payable to the Delhi, Lucknow and Jaipur editions would
constitute the proportion of value attributable to the dissemination in the
Union territory of Delhi and States of Uttar Pradesh and Rajasthan respectively.
DEF should issue separate State wise and Union territory wise invoices based on
the editions.
(b) in the case of printed material like pamphlets, leaflets, diaries,
calendars, T shirts etc, the amount payable for the distribution of a specific
number of such material in a particular State or Union territory is the value of
advertisement service attributable to the dissemination in such State or Union
territory, as the case may be.
Illustration: As a part of the campaign 'Swachh Bharat', ABC has
engaged a company GH for printing of one lakh pamphlets( at a total cost of one
lakh rupees) to be distributed in the states of Haryana, Uttar Pradesh and
Rajasthan. In such a case, ABC should ascertain the breakup of the pamphlets to
be distributed in each of the three States i.e. Haryana, Uttar Pradesh and
Rajasthan, from the Ministry or department concerned at the time of giving the
print order. Let us assume that this breakup is twenty thousand, fifty thousand
and thirty thousand respectively. This breakup should be indicated in the print
order. The place of supply of this service is in Haryana , Uttar Pradesh and
Rajasthan. The ratio of this breakup i.e 2:5:3 will form the basis of value
attributable to the dissemination in each of the three States. Separate invoices
will have to be issued State wise by GH to ABC indicating the value pertaining
to that State i.e twenty thousand rupees- Haryana, fifty thousand rupees- Uttar
Pradesh and thirty thousand rupees-Rajasthan.
(c) (i) in the case of hoardings other than those on trains , the amount
payable for the hoardings located in each State or Union territory, as the case
may be, is the value of advertisement service attributable to the dissemination
in each such State or Union territory, as the case may be.
Illustration: ABC as part of the campaign 'Saakshar Bharat' has
engaged a firm Ufor putting up hoardings near the Airports in the four metros
i.e. Delhi, Mumbai, Chennai and Kolkata . The release order issued by ABC to
IJwill have the city wise, location wise breakup of the amount payable for such
hoardings. The place of supply of this service is in the Union territory of
Delhi and the States of Maharashtra, Tamil Nadu and West Bengal. In such a case,
the amount actually paid to Ufor the hoardings in each of the four metros will
constitute the value attributable to the dissemination in the Union territory of
Delhi and the States of Maharashtra, Tamil Nadu and West Bengal respectively.
Separate invoices will have to be issued State wise and Union territory wise by
IJ to ABC indicating the value pertaining to that State or Union territory.
(ii) in the case of
advertisements placed on trains, the breakup, calculated on the basis of the
ratio of the length of the railway track in each State for that train, of the
amount payable for such advertisements is the value of advertisement service
attributable to the dissemination in such State or Union territory, as the case
may be.
Illustration: ABC places an order on KL for advertisements to be
placed on a train with regard to the "Janani Suraksha Yojana". The length of a
track in a state will vary from train to train. Thus for advertisements to be
placed on the Hazrat Nizamuddin Vasco Da Gama Goa Express which runs through
Delhi, Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra, Karnataka and Goa,
KL may ascertain the total length of the track from Hazrat Nizamuddin to Vasco
Da Gama as well as the length of the track in each of these States and Union
territory from the website www, indianrail. gov, in. The place of supply of this
service is in the Union territory of Delhi and States of Haryana, Uttar Pradesh,
Madhya Pradesh, Maharashtra Karnataka and Goa. The value of the supply in each
of these States and Union territory attributable to the dissemination in these
States will be in the ratio of the length of the track in each of these States
and Union territory. If this ratio works out to say 0.5:0.5: 2:2:3:3:1, and the
amount to be paid to KL is one lakh twenty thousand rupees, then KL will have to
calculate the State wise and Union territory wise breakup of the value of the
service, which will be in the ratio of the length of the track in each State and
Union territory. In the given example the State wise and Union territory wise
breakup works out to Delhi (five thousand rupees), Haryana(flve thousand
rupees), Uttar Pradesh (twenty thousand rupees), Madhya Pradesh (twenty thousand
rupees), Maharashtra (thirty thousand rupees), Karnataka (thirty thousand
rupees) and Goa (ten thousand rupees). Separate invoices will have to be issued
State wise and Union territory wise by KL to ABC indicating the value pertaining
to that State or Union territory.
(d) (i) in the case of advertisements on the back of utility bills of oil
and gas companies etc, the amount payable for the advertisements on bills
pertaining to consumers having billing addresses in such States or Union
territory as the case may be, is the value of advertisement service attributable
to dissemination in such State or Union territory.
(ii) in the case of advertisements on railway tickets, the breakup, calculated on the basis of the ratio of the number of Railway Stations in each State or Union territory, when applied to the amount payable for such advertisements, shall constitute the value of advertisement service attributable to the dissemination in such State or Union territory, as the case may be.
Illustration: ABC
has issued a release order to MN for display of advertisements relating to the "Ujjwala
" scheme on the railway tickets that are sold from all the Stations in the
States of Madhya Pradesh and Chattisgarh. The place of supply of this service is
in Madhya Pradesh and Chattisgarh. The value of advertisement service
attributable to these two States will be in the ratio of the number ofrailway
stations in each State as ascertained from the Railways or from the website www,
indianrail. gov, in. . Let us assume that this ratio is 713 : 251 and the total
bill is rupees nine thousand six hundred and forty. The breakup of the amount
between Madhya Pradesh and Chattisgarh in this ratio of713:251 works out to
seven thousand one hundred and thirty rupees and two thousand five hundred and
ten rupees respectively. Separate invoices will have to be issued State wise by
MN to ABC indicating the value pertaining to that State.
e) in the case of advertisements over radio stations the amount payable to
such radio station, which by virtue of its name is part of a State or Union
territory, as the case may be, is the value of advertisement service
attributable to dissemination in such State or Union terrritory, as the case may
be.
Illustration: For an advertisement on 'Pradhan Mantri Ujjwala
Yojana', to be broadcast on a FM radio station OP, for the radio stations of OP
Kolkata, OP Bhubaneswar, OP Patna, OP Ranchi and OP Delhi, the release order
issued by ABC will show the breakup of the amount which is to be paid to each of
these radio stations. The place of supply of this service is in West Bengal,
Odisha, Bihar Jharkhand and Delhi. The place of supply of OP Delhi is in Delhi
even though the studio may be physically located in another state. Separate
invoices will have to be issued State wise and Union territory wise by MN to ABC
based on the value pertaining to each State or Union territory.
(f) in the case of advertisement on television channels, the amount
attributable to the value of advertisement service disseminated in a State shall
be calculated on the basis of the viewership of such channel in such State,
which in turn, shall be calculated in the following manner, namely: -
(i) the channel viewership figures for that channel for a State or Union territory shall be taken from the figures published in this regard by the Broadcast Audience Research Council;
(ii) the figures published for the last week of a given quarter shall be used for calculating viewership for the succeeding quarter and at the beginning, the figures for the quarter 1st July, 2017 to 30th September, 2017 shall be used for the succeeding quarter 1st October, 2017 to 31st December, 2017;
(iii) where such channel viewership figures relate to a region comprising of more than one State or Union territory, the viewership figures for a State or Union territory of that region, shall be calculated by applying the ratio of the populations of that State or Union territory, as determined in the latest Census, to such viewership figures;
(iv) the ratio of the viewership figures for each State or Union territory as so calculated, when applied to the amount payable for that service, shall represent the portion of the value attributable to the dissemination in that State or Union territory.
Illustration: ABC issues a release order with QR channel for telecasting an advertisement relating to the Pradhan "Mantri Kaushal Vikas Yojana " in the month of November, 2017. In the first phase, this will be telecast in the Union territory of Delhi, States of Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. The place of supply of this service is in Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. In order to calculate the value of supply attributable to Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand, QR has to proceed as under'
I. QR will ascertain the viewership figures for their channel in the last week of September 2017 from the Broadcast Audience Research Council. Let us assume it is one lakh for Delhi and two lakhs for the region comprising of Uttar Pradesh and Uttarakhand and one lakh for the region comprising of Bihar and Jharkhand;
II. since the Broadcast Audience Research Council clubs Uttar Pradesh and Uttarakhand into one region and Bihar and Jharkhand into another region, QR will ascertain the population figures for Uttar Pradesh , Uttarakhand, Bihar and Jharkhand from the latest census;
III. by applying the ratio of the populations of Uttar Pradesh and Uttarkhand, as so ascertained, to the Broadcast Audience Research Council viewer ship figures for their channel for this region, the viewership figures for Uttar Pradesh and Uttarakhand and consequently the ratio of these viewership figures can be calculated. Let us assume that the ratio of the populations of Uttar Pradesh and Uttarakhand works out to 9:1. When this ratio is applied to the viewership figures of two lakhs for this region, the viewership figures for Uttar Pradesh and Uttarakhand work out to one lakh eighty thousand and twenty thousand respectively;
TV. in a similar manner the breakup of the viewership figures for Bihar and Jharkhand can be calculated. Let us assume that the ratio of populations is 4:1 and when this is applied to the viewership figure of one lakh for this region, the viewership figure for Bihar and Jharkhand works out to eighty thousand and twenty thousand respectively;
V. the viewership figure for each State works out to Delhi (one lakh ), Uttar Pradesh ( one lakh eighty thousand ), Uttarakhand (twenty thousand ), Bihar ( eighty thousand) and Jharkhand (twenty thousand). The ratio is thus 10:18:2:8:2 or 5:9:1:4:1 ( simplification).
VI . this ratio has to be
applied when indicating the breakup of the amount pertaining to each State .
Thus if the total amount payable to QR by ABC is twenty lakh rupees, the State
wise breakup is five lakh rupees( Delhi), nine lakh rupees( Uttar Pradesh) one
lakh rupees ( Uttarakhand), four lakh rupees ( Bihar) and one lakh rupees
(Jharkhand). Separate invoices will have to be issued State wise and Union
territory wise by QR to ABC indicating the value pertaining to that State or
Union territory.
(g) in the case of advertisements at cinema halls the amount payable to a
cinema hall or screens in a multiplex, in a State or Union territory, as the
case may be, is the value of advertisement service attributable to dissemination
in such State or Union territory, as the case may be.
Illustration: ABC commissions STfor an advertisement on 'Pradhan Mantri Awas Yojana' to be displayed in the cinema halls in Chennai and Hyderabad. The place of supply of this service is in the states of Tamil Nadu and Telengana. The amount actually paid to the cinema hall or screens in a multiplex, in Tamil Nadu and Telangana as the case may be, is the value of advertisement service in Tamil Nadu and Telangana respectively. Separate invoices will have to be issued State wise and Union territory wise by ST to ABC indicating the value pertaining to that State.
(h) in the case of advertisements over internet, 2[the service shall be deemed to have been provided all over India and] the amount attributable to the value of advertisement service disseminated in a State or Union territory shall be calculated on the basis of the internet subscribers in such State or Union territory, which in turn, shall be calculated in the following manner, namely:-
(i) the internet subscriber figures for a State shall be taken from the figures published in this regard by the Telecom Regulatory Authority of India;
(ii) the figures published for the last quarter of a given financial year shall be used for calculating the number of internet subscribers for the succeeding financial year and at the beginning, the figures for the last quarter of financial year 2016-2017 shall be used for the succeeding financial year 2017-2018;
(iii) where such internet subscriber figures relate to a region comprising of more than one State or Union territory, the subscriber figures for a State or Union territory of that region, shall be calculated by applying the ratio of the populations of that State or Union territory , as determined in the latest census, to such subscriber figures;
(iv) the ratio of the subscriber figures for each State or Union territory as so calculated, when applied to the amount payable for this service, shall represent the portion of the value attributable to the dissemination in that State or Union territory.
Illustration: ABC
issues a release order to WX for a campaign over internet regarding linking
Aadhaar with one's bank account and mobile number. WX runs this campaign over
certain websites. In order to ascertain the statewise breakup of the value of
this service which is to be reflected in the invoice issued by WX to ABC, WX has
to first refer to the Telecom Regulatory Authority ofIndia figures for quarter
ending March, 2017, as indicated on their website www.trai.gov.in. These figures
show the service area wise internet subscribers . There are twenty two service
areas. Some relate to individual States some to two or more States and some to
part of one State and another complete State. Some of these areas are
metropolitan areas. In order to calculate the State wise breakup, first the
State wise breakup of the number of internet subscribers is arrived at. (In case
figures of internet subscribers of one or more States are clubbed, the
subscribers in each State is to be arrived at by applying the ratio of the
respective populations of these States as per the latest census.). Once the
actual number of subscribers for each State has been determined, the second step
for WX involves calculating the State wise ratio of internet subscribers. Let us
assume that this works out to 8: I : 2... and so on . for Andhra Pradesh,
Arunachal Pradesh, Assam.... and so on. The third step for WXwill be to apply
these ratios to the total amount payable to WXso as to arrive at the value
attributable to each State. Separate invoices will have to be issued State wise
and Union territory wise by WX to ABC indicating the value pertaining to that
State or Union territory.
(i) in the case of advertisements through short messaging service the
amount attributable to the value of advertisement service disseminated in a
State or Union territory shall be calculated on the basis of the
telecommunication herein after referred to as telecom) subscribers in such State
or Union territory, which in turn, shall be calculated in the following manner,
namely:-
(a) the number of telecom subscribers in a telecom circle shall be ascertained from the figures published by the Telecom Regulatory Authority of India on its website www. trai.gov.in;
(b) the figures published for a given quarter, shall be used for calculating subscribers for the succeeding quarter and at the beginning , the figures for the quarter 1st July, 2017 to 30th September, 2017 shall be used for the succeeding quarter 1st October, 2017 to 31st December, 2017;
(c) where such figures relate to a telecom circle comprising of more than one State, or Union territory, the subscriber figures for that State or Union territory shall be calculated by applying the ratio of the populations of that State or Union territory, as determined in the latest census, to such subscriber figures.
Illustration-1: In the case of the telecom circle of Assam, the amount attributed to the telecom circle of Assam is the value of advertisement service in Assam.
Illustration-2: The telecom circle of North East covers the States of Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Manipur and Tripura. The ratio of populations of each of these States in the latest census will have to be determined and this ratio applied to the total number of subscribers for this telecom circle so as to arrive at the State wise figures of telecom subscribers. Separate invoices will have to be issued State wise by the service provider to ABC indicating the value pertaining to that State.
Illustration-3: ABC commissions UV to send short messaging service to voters asking them to exercise their franchise in elections to be held in Maharashtra and Goa. The place of supply of this service is in Maharashtra and Goa. The telecom circle of Maharashtra consists of the area of the State of Maharashtra ( excluding the areas covered by Mumbai which forms another circle) and the State of Goa. When calculating the number of subscribers pertaining to Maharashtra and Goa, UVhas to -
I obtain the subscriber figures for Maharashtra circle and Mumbai circle and add them to obtain a combined figure of subscribers;
II obtain the figures of the population of Maharashtra and Goa from the latest census and derive the ratio of these two populations;
III this ratio will then have to be applied to the combined figure of subscribers so as to arrive at the separate figures of subscribers pertaining to Maharashtra and Goa;
IV the ratio of these subscribers when applied to the amount payable for the short messaging service in Maharashtra circle and Mumbai circle, will give breakup of the amount pertaining to Maharashtra and Goa. Separate invoices will have to be issued State wise by UV to ABC indicating the value pertaining to that State.
Illustration-4: The telecom circle of Andhra Pradesh consists of the areas of the States of Andhra Pradesh , Telangana and Yanam, an area of the Union territory of Puducherry. The subscribers attributable to Telangana and Yanam will have to be excluded when calculating the subscribers pertaining to Andhra Pradesh.
(d) the ratio of the
subscriber figures for each State or Union territory as so calculated, when
applied to the amount payable for that service, shall represent the portion of
the value attributable to the dissemination in that State or Union territory.]
1. Inserted Vide: Notification
No.12/2017-Integrated Tax dt.15/11/2017
2. Inserted Vide: Notification No.04/2018-Integrated Tax dt.31/12/2018 [Para 2]