Service tax: India
This is a collection of articles archived for the excellence of their content.
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Coverage of Service tax
1994-2018
From: February 2, 2018: The Times of India
From: February 2, 2018: The Times of India
Over the years service tax has come to bite middle-class Indians even more deeply and widely than income tax. Within just two decades of introduction, its rate has risen over 3 times (income tax rates have fallen) and its coverage has gone up infinitely (from 3 services to all but a few) when millions of Indians have gotten out of the income-tax net. No wonder, its collections have risen 676 times, vis a vis 23 times rise in income tax
Services that are taxed
See graphics:
Service tax: India.
Tax receipts, excise duty and service tax, 2007-14, year-wise
Downloads from foreign websites to invite 15% tax
Lubna Kably, Downloads from foreign websites to invite 15% tax, Nov 12 2016 : The Times of India
The next time you download music or an e-book from an overseas site, or decide to buy some storage on a cloud from a foreign service provider, beware. Beginning December 1, a service tax component of 15% will be added to your bill.
Domestic suppliers, say of films which can be downloaded by customers in India, already incur this service tax. However, if the supplier was overseas, the tax didn't apply if the recipient of the service was an individual, government, local body or government agency based in India. From an industry perspective, there is now a level playing field between domestic and overseas suppliers.
The tax component is the result of amendments by the Central Board of Excise and Customs in the `Place of Provisions of Services Rules' (PPSR) for `online information and database access or retrieval services'. In a surprise move, the Central Board of Excise and Customs, through four notifications dated November 9, changed the definition of `place of provision of service'.
Overseas suppliers incur the service tax only in respect of business-to-business (B2B) transactions, where the recipient was in India. Further, an exemption was available in such transactions if the supply was related to information databases (such as a subscription for international tax journals).
Until now, if service providers were outside India, the place of provision of service was also outside India and no service tax was payable on such services supplied to individuals, government and government bodies in India. From December 1, the place of provision of a service will be the location of the service recipient.
“Hence, say , all downloads in India will be subject to service tax. The amendments impact overseas companies providing various services like advertisements, web subscriptions, cloud hosting, music, ebooks and gaming, to name a few. These services provided to governments and individuals were earlier not subject to service tax. They now become taxable and the overseas service provider or any intermediary or authorised representative will need to register in India and pay the service tax,“ says Sunil Gabhawalla, chartered accountant and indirect tax expert.
He adds, “Since the overseas service provider is likely to collect this tax from the end user who downloads these services, it would increase the cost for the consumer.“ The definition of `online information and database access or retrieval services' has also been changed. It now means services whose “delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology“.
