[TO BE PUBLISHED IN THE GAZETTE OF IN DIA, EXTRAORDINARY, PART II, SECTION
3, SUB-SECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
[Central Board of Excise and Customs]
Notification No. 12/2017 — Integrated Tax
New Delhi, the 15th November, 2017
24 Kartika,1939 Saka
G.S.R. _(E). - In exercise of the powers conferred by sub section ( 14) of section 12 read with
section 22 of the Integrated Goods and Services Tax Act , 2017 (13 of 2017), the Central
Government hereby makes the following rules to amend the Integrated Goods and Services Tax
Rules, 2017, namely:-
1. Short title and commencement.-(1) These rules may be called the Integrated Goods and
Services Tax Amendment Rules, 2017.
(2) They shall be deemed to have come into force on the 1st day of July, 2017.
2. In the said rules, after rule 2, the following rule shall be inserted, namely:-
wai 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 of supply 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
LJ for putting up hoardings near the Airports in the four metros i.e. Delhi, Mumbai, Chennai
and Kolkata . The release order issued by ABC to IJ will 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 IJ for 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 lJ 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.
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+] , and the amount to be paid to KL is one lakh
wise breakup works out to Delhi (five thousand rupees), Haryana( five 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.
Mlustration: ABC has issued a release order to MN Jor 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 of railway 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 of 713:251
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 1°‘ July, 2017 to 30 September, 2017 shall be used for the succeeding quarter
1*' October, 2017 to 31 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, OR has to proceed as under—
I. OR 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, OR will
ascertain the population figures for Uttar Pradesh , Uttarakhand , Bihar and Jharkhand
Jrom the latest census;
Ill. by applying the ratio of the populations of Uttar Pradesh and Uttarkhand, as
So ascertained, to the Broadcast Audience Research Council viewership figures Jor 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;
IV. 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:]
( 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 OR by ABC is twenty lakh
rupees, the State wise breakup is five lakh rupees( Dethi), 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 OR to ABC indicating the value pertaining to that State or Union territory.
(g) inthe 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 ST for 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 T. elengana. The amount actually paid to
the cinema hall or screens in a multiplex, in Tamil Nadu and T, elangana 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, 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:-
(1) 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 of India 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: 1 : 2... and so on. for Andhra Pradesh, Arunachal
Pradesh, Assam..... and so on. The third step for WX will be to apply these ratios to the
total amount payable to WX so 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 1*
July, 2017 to 30" September, 2017 shall be used for the succeeding quarter 1** October,
2017 to 31°' 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.
Mlustration-2: The telecom circle of North East covers the States of Arunachal Pradesh, Meghalaya, Mizoram, Nagaland Manipur and Tripura. The ratio of populations
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
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 Jorms another circle) and the State of Goa. When calculating the number of subscribers pertaining to Maharashtra and Goa, UV has to -
I obtain the subscriber figures for Maharashtra circle and Mumbai circle and add them to obtain a combined Jigure of subscribers;
II obtain the figures of the population of Maharashtra and Goa Srom the latest census and derive the ratio of these two populations;
Ill this ratio will then have to be applied to the combined Jigure 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 Jor 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 , T, elangana 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.
[F. No. 137/20/2017- Service Tax
(Dr. Sreepagvathy\S.L.)
Under Secretary to the Government of India
Note: The principal rules were published in the Gazette of India Extraordinary vide number
G.S.R- 699(E) dated 28" June, 2017.
