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Give me details of proposed service tax on sites downloads

jraju (Others) (283 Points)

14 November 2016

Hi, Recently i read in news papers about the proposed levy of service tax on downloads from sites. The news paper did not elaborate on that . I want to know, what is the actual proposal. Is it comman for all. The ISProvider alreay collecting the service tax on the users according to their plans. what is this new tax. Why there has been no publicity of the issue. The proposal of service tax is due to start from December 1, this year.

Is free download from sites, llike movies or software, which already allowed under the plans would commonly impose this? to all. Some plans allow download for certain gb for a period. Would all the downloads be levied this tax. How much percentage would be levied? Any information by the experts

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7 Replies

jraju (Others) (283 Points)
Replied 14 November 2016

i could get the link of the news paper . here it is

https://timesofindia.indiatimes.com/business/india-business/Now-15-service-tax-on-music-e-books-sold-on-foreign-portals/articleshow/55380234.cms

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jraju (Others) (283 Points)
Replied 15 November 2016

Hi, Nobody is replying to the question i raised. The main purpose of my raising the question is the service provider is calculating service tax on the usage of internet. The viewing of a movie or video is calculated as bytes or mb used in internet,for which the consumers are paying the service tax along with the plan charges.

So, an extra of 15% surchange proposed will furher burden the consumer , as he is the last target. pl say something why this is proposed.

jraju (Others) (283 Points)
Replied 01 December 2016

Hi, There was an article regarding this which i saw in service tax matter article. Would anybody care to clarify, what is the effect of this proposal to the broadband users using unlimited bb services. They are taxed already. Would this mean additional tax , of 15 for any free downloads from websites

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 05 December 2016

Hi Jraju,

Thanks for your views. I will consider this in my next writing.

In your query there are two services. Firstly the Broadband service and other is services provided using this internet service such as online gaming, online downloads, etc. The broadband service is not an OIDAR service. The other services provided using broadband service are OIDAR services, if service receiver paid for such service.

Tax liability (if you paid for such service):

When service provided from outside India to person in India

In all cases reverse charge would be applicable. In other words service receiver would be liable to pay ST.

Exception: If service provided from outside India to service receiver in India who is not registered with ST authorities. In such case service provider is liable to pay ST.

When service provided from India to person in India

In all cases forward charge would be applicable.

Conclusion:

Service of Unlimited download would not affect the service receiver, unless it paid for such service. Further, no affect on the service receiver using service for personal purposes.

jraju (Others) (283 Points)
Replied 06 December 2016

HI, i thank you for the clarification on the subject. But, you could also touch upon, the limited broadband plan effects. I am not clear why no service provider alerted anything about that in their website or thro ads or notification or sms. Should not they clear what it is all about. Even the newspaper has not given more than that news in the link.

The technical things for the implementation. But what about a layman knowledge of such things as oidar etc..I was going thro the articles, that i came across your article. Why such silence on part of trai or other service provider on this.

When plan if any is implemented , the first think is the user concern and in this I thank you . This is the only response to the thread i raised.

What was the status change in the whole thing before december 1 and after it. Why it was moted? Was the service provided free of cost hitherto.Please include in your reply as well as in the article. Thanks once again

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Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 07 December 2016

I am not clear why no service provider alerted anything about that in their website or thro ads or notification or SMS?
Most of the companies, providing OIDAR services, are registered in India. They are operating in the form of Subsidiary or branch. Therefore these companies were already registered under the service tax. The provisions have been amended to capture the foreign players. This amendment is in line with the international principles enunciated by OECD on applicability of VAT on cross border sales, particularly related to B2C transactions. It would not affect the Indian players. But rather I would say it would be loudable change for them.

Why such silence on part of trai or other service provider on this?

It is a fiscal measure in which, I believe, TRAI would not have any role to play. Further, it is an international practice. The EU members are following this cross border concept from decades.

When plan if any is implemented, the first think is the user concern.

Hahaha… I believe it would not much affect the users who are getting the service from the Indian companies. But surely the cost would be increase if services are procured from the Foreign Service provider.

What was the status change in the whole thing before December 1 and after it. Why it was moted? Was the service provided free of cost hitherto. Please include in your reply as well as in the article.

There would be a paradigm shift. The amendment has been made keeping the upcoming roll out of GST. Further for sake of clarity the entire amendments have been incorporated in the new draft GST model law.

It would not affect the FOC transactions. As the service tax is not levied FOC transactions. Under GST it would be taxable only if transaction is made between related persons or from assessee’s own establishment (Branch/HO).

Hope I am clear. If still any query feel free to ask.

jraju (Others) (283 Points)
Replied 18 December 2016

Hi, Thanks for your reply. I came late here , because from 6th to 11 I was out of station. From 12, the vardah cyclone rage cut all the communications and it was restored only yesterday and i saw your post.

Regarding the third point, is that mean that if a download is from foreign site, but the ISP is in India, then there is no increase in the already existing service tax. I did not thought, that i have touched upon a item that is going to be incorporated in proposed GST. If this is an article from GST, then i do not know much about it. But as a regular user of internet, the query came to my mind.

Who is meant by foreign service provider?