Skip to main content

❓Is Sponsorship Service Taxable under GST?


✅ 1️⃣ Is Sponsorship Service Taxable under GST?

Yes, sponsorship is treated as a supply of service under GST.

🧾 Covered under Section 7 of CGST Act (Supply of services)
🎯 Classified under Service Accounting Code (SAC) 998361 – Advertising and Sponsorship Services

⚖️ 2️⃣ Applicable GST Rate:

  • 🏷️ 18% GST (9% CGST + 9% SGST OR 18% IGST)

  • ✅ No exemption, even if done for brand awareness or charitable cause

🔄 3️⃣ Who Pays GST? – Forward or Reverse Charge?

This depends on who is the recipient 👇

🧍‍♂️ A. If Sponsor is a Body Corporate or Firm

🏦 Reverse Charge Mechanism (RCM) applies!
🔁 GST is to be paid by the recipient (sponsor)

✅ As per Notification No. 13/2017 – Central Tax (Rate)

📌 Applicable when:

  • Sponsorship is received by an individual, HUF, trust, or society (like sports clubs, event organizers)

  • Sponsor is a registered company or firm

🏢 B. If Sponsor is NOT a Body Corporate or Firm (e.g., Individual)

👉 Forward Charge applies
📤 GST is charged by the service provider (event organizer, etc.)

🧾 4️⃣ Input Tax Credit (ITC):

✅ Available to the sponsor (if under RCM)
💡 Can be claimed in GSTR-3B if the service is used for business purposes

📋 Example for RCM Case:

🧍‍♂️ ABC Ltd. (a company) sponsors a cricket tournament organized by a society.

  • Amount paid: ₹5,00,000

  • GST @18% = ₹90,000

  • ✅ RCM applies → ABC Ltd. pays ₹90,000 to govt and takes ITC

⚠️ Common Mistakes to Avoid:

🚫 Ignoring RCM when sponsor is a company
🚫 Assuming sponsorship for a charitable cause is exempt
🚫 Failing to issue proper self-invoice under RCM

🧮 Accounting Tip:

  • Under RCM, the sponsor must:

    1. Pay GST via cash (not through ITC)

    2. Claim ITC in same month’s return

Labels:

Comments

Post a Comment

Popular posts from this blog

❓Sale of Fixed Assets Taxable under GST 🔍

🔍 1️⃣ Is Sale of Fixed Assets Taxable under GST? ✅ Yes , if: Asset was used in the course or furtherance of business You're a registered person under GST 🧾 Treated as a "supply of goods" under Section 7 of CGST Act 🛑 Not taxable if: Sold as personal property Sold by an unregistered person 📈 2️⃣ GST Rate = Same as Applicable Goods Rate 🎯 Depends on the HSN classification of the asset Old computer sold? ➡️ GST @ 18% Vehicle sold? ➡️ GST @ 28% (if applicable) ♻️ 3️⃣ Input Tax Credit (ITC) & Rule 44 – Reversal Logic If ITC was claimed on the capital asset: 📐 On Sale = Pay higher of : GST on transaction value ITC claimed (🔁 reduced by 5% per quarter or 20% per year of use) 🧮 Example : ITC originally availed = ₹60,000 Used for 2 years = 40% reduction (₹24,000) Remaining ITC = ₹36,000 🔁 Pay GST on sale: ➡️ Compare ₹36,000 vs. GST on actual sale value – pay the higher! 💸 4️⃣ Sale Without Consideration = Deemed Supply! 🎁 Trans...
Post a Comment
Read more

💡 Clause 4 of Form 3CD: Indirect Tax Applicability – What Needs to Be Disclosed?

Clause 4 of Form 3CD is your cue to disclose whether the assessee is liable to pay any indirect taxes . This includes GST , and historically, excise duty , service tax , VAT , and even customs duty . But this clause often gets ignored, misunderstood, or under-reported — especially in transitional cases or for assessees with multiple registrations. 🔍 🧾 What Does Clause 4 Require? Clause 4 asks: “Whether the assessee is liable to pay indirect tax like excise duty , service tax , sales tax , goods and services tax , customs duty , etc. If yes, furnish the registration number , GST number or any other identification number allotted.” So, your job is to: ✅ Confirm whether the assessee was liable for any indirect taxes during the relevant financial year ✅ If yes, provide the registration numbers for each applicable law (GSTIN, Importer-Exporter Code, etc.) 🔄 Indirect Tax Categories (Applicable Based on Timeline) Tax Type Applicability GST      ...
Post a Comment
Read more

🚫 E-Invoice Without IRN – Valid or Not?🧾

🔍 What is IRN? IRN = Invoice Reference Number It is a unique 64-character number generated by the GST e-invoice portal (IRP) when you upload your B2B invoice. 📌 E-invoice = Invoice uploaded to IRP + IRN + QR code ❓ What Happens If You Raise an E-invoice Without IRN? ❌ It is NOT a valid tax invoice under GST! As per Rule 48(4) of the CGST Rules: “A registered person shall not issue an invoice in any manner other than by generating IRN from the Invoice Registration Portal (IRP).” ⚠️ Consequences of Not Generating IRN 🚨 Issue ⚡ Impact No IRN or QR code 📄 Invoice is invalid under GST Wrongful ITC to buyer ❌ Buyer cannot claim ITC legally Penalty under GST 💸 Up to ₹25,000 per invoice (Sec 122) Legal disputes with customer 📉 Business risk, reputation issues GSTR-1 mismatch 🔁 Reconciliation problems ✅ When is E-Invoice (with IRN) Mandatory? As of now (FY 2024-25), e-invoicing is mandatory for: 📈 Turnover > ₹5 crore in any financ...
Post a Comment
Read more