Websites Offering Space to Come under Tax Umbrella

According to new guidelines to widen the service tax network, Web sites that sell space to companies could be asked to pay service tax under the category of advertising services with effect from 1996.

The authority for advance ruling for service tax had earlier dismissed an application filed by Google Online India Pvt Ltd seeking a clarification whether advertising services was liable to the tax.

According to the guidelines set by the Ministry of Finance, selling space for display or exhibition of an advertisement means providing a service to advertisers and clients and hence covered by the definition of advertising agency.

Experts believe that concluding from Google's case it was quite clear that government could interpret sale of space by internet companies as covered under advertisement services and tax them accordingly.