Music download, e-book services etc from an overseas service provider are going to be expensive as the Government is going to impose 15% service tax on these items from this December.
The domestic suppliers in India are already under the Service Tax net for the services rendered by them in respect of such kind of services.At present, the place of provision of a service is either the place of the service provider.The current move is to cover such online services rendered by the overseas suppliers to the Indian recipients.Reportedly, service tax will be levied on B2B transactions between the overseas suppliers and the Indian recipients for online services except information database such as subscription for international tax journals.
Recently, the CBEC has issues three inter-linked notifications with an aim to amend the definition of the term “place of provision of service”. As per the amended provision, the place of provision of a service will be the location of a service recipient. Consequently, online services rendered by the overseas suppliers to the recipients including individuals, government, local body or government agencies based in India. The new provision is applicable from the 1st day of this December.
The notification also amends the definition of the term“online information and database access or retrieval services”in order to include services such as internet advertising, providing cloud services, e-book, movies, music, software and other intangibles via telecom network or internet, providing data or information in electronic format via a computer network, online supply of digital content, digital data storage and online gaming.
The present law only includes 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.”
Read the full text of the notification below.