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Service tax applicable for all services sold to Indians
leapswitch
Patron Provider, Veteran
in General
Similar to EU, India has started service tax for all hosting services sold to Indian residents, regardless of the location of the company selling them or the server location. So a UK registered company, selling hosting to Indian clients on servers in USA, will need to register with Indian service tax department and charge 15% service tax.
Comments
If they work out a way to actually enforce this on international companies it'll just be easier to stop selling to Indian clients.
The Indian government has no jurisdiction outside of India. This is just hot air from politicians.
From TOI Page:
But if the supplier is overseas, the tax doesn't apply if the recipient is an individual, government, local body or government agency based in India. Overseas suppliers incur the service tax only in respect of B2B transactions where the recipient is in India. Further, an exemption is available in such B2B transactions if the supply is related to information databases (such as a subscription for international tax journals).
EDIT: IDK what's going on
This is the current rule.
as if the discontinuation of currency bills was not enough for the govt. ?
I wonder if DigitalOcean will eat the 15% loss or tack it on the Bangalore instance bill.
Why would they? DO already charges 21% VAT to anyone w/ a billing address in EU.
I honestly wasn't aware. Guess they'll do it here too.
They should already charge service tax to Indian clients in bangalore location as it is hosted in India. Currently a lot of companies are evading service tax like DO, resellerclub, Godaddy etc.
I think this rule is only applied If foreigner company open office in India. Company who do not have a office in India did not come under India service tax. This is only for company like DO/Godaddy who have a office/company in India.
That's a completely different issue. And no, it wasn't enough. Civilians with no black money are absolutely no issues. Only those with black money are having serious troubles. Also, if someone flaunts a 500 or 1000 INR note for a 6 -15 INR ticket, he is bound to face inconvenience.
Not 21%. For individuals, they charge the VAT, which is between 17% (Luxembourg) and 27% (Orbánisztán) depending on your country.
Difference wth the EU rules is that there actually are treaties to enforce it. I haven't heard anything about this one though.
??? Name one that enforces this on US.
Actually from what my accountant told me, when doing business, Portugal to anywhere else than EU, we simply don't charge VAT and the buyer will have to pay VAT his own to his country.
This is not correct. It only applies if you are selling to other businesses, but for regular non-business customers you have to charge VAT. (like often the case with hosting plans)
Bullshit: http://europa.eu/youreurope/business/vat-customs/cross-border/index_en.htm
No differentiation between business and non-business customers.
Forgot to specify that, you're right. B2B.
Will have to discuss that.... It'd be full profit for us, but it's not..
I kinda doubt that the official EU site has outdated info
So that means any hosting company or managed service provider or a consultant reselling hosting services with "presence in India" will have to charge 15% Service Tax to any Company or Individual ?
To the best I recall, there is a 10,00,000 INR (million) slab for service exemption for companies, if they cross it, then only they need to register for the service tax number. Any Company without a registered service TAX ID cannot charge tax from any entity
Agreed. When we pay for our corel draw license, we're not charged with VAT, but we need to pay it to the corresponding country. That's why I mentioned this.
Watch out with that, Tax Evasion isn't something you should claim without proof... For instance, is DO a registered company in India ? If so, what's its main activity ?
For example, let's presume DO is registered in India but it's main activity is just handling the datacenter for the mother company. They are two separated entities, DO India does not sell any services to Indians = no service tax, the main company does but it's located outside India = no service tax evasion.
I LOLed
In India, the rule is Place of Provisions of Services. If the service is provisioned in India, customer is Indian, then service tax is to be charged. It doesn't matter where the company is registered.
Now, it has changed to Any service provided anywhere in the world, to an Indian customer, service tax has to be charged.
There is already an ongoing case against ResellerClub / PDR regarding regarding service tax.
This is a tricky one; to be fully compliant with EU regulations we went a slightly different route by making Cyberlabs s.r.o. export only.
Everyone was already moaning when VAT for ESS was introduced in 2015.
If the trend goes to every country creating their own version of VAT we will have quite some fun in the years to come.
Almost every country (193) is already charging VAT, the remaining can be seen as charing a 0% rate. 90% of the US states is also charging it. And it's the same everywhere: a percentage of the final price.
Technically it could be quite easy: you just need a table with the location, the rate and the IBAN where to send the money.
Anyway this is a good trend and the only way to keep the advantages of the free trade while reducing the associated disadvantages (IMHO).
The site you linked states exactly what I wrote. But I will quote the website:
Countries within the EU:
Selling to businesses: "If you sell goods to another business and these goods are sent to another EU country, you do not charge VAT - if the customer has a valid VAT number."
So B2B you charge no VAT.
Selling to consumers: "If you sell goods and send them to consumers in another EU country, you need to register there and charge VAT at the rate applicable in that country"
So B2C you charge VAT.
We never talked about customers outside of the EU.
You say that as if that's something breath-takingly unexpected, but to put things in perspective, 1000 INR is only $14.8, and quite obviously 500 INR is $7.4. Dunno maybe indians are still really poor en masse and that's a months' worth of wage or something, but can you imagine if USA decommissioned all $20, $50 and $100 notes to "fight corruption"?
As for the actual topic, we have something similar: https://themoscowtimes.com/articles/russia-state-duma-passes-google-tax-law-53310
Nobody expects any company selling hosting/etc to actually bother, large fish such as Google may have to, but for anybody else they won't have means to track and enforce this, and no reason to comply unless you have actual business in the country itself as well.