Main query: There are a few "Merchant of Record" platforms which say they will take care of all sales tax, VAT, etc. and even refunds for any sale of digital products in countries they specify. If I receive payments from such an entity after the sale of digital products I create, would such transactions be recognized by the income tax department for 44ADA, 44AD and GST?
What I plan to do: I would be building various types of software and offering it for download on a one time payment basis or subscripttion model to anyone in the world. People could download it either from a website I create or from Google Play or Microsoft app store or Apple app store or any other such platform.
Reason for asking: I file taxes on my own. So far done it for 44ADA. When I sell software as a one time payment, I assume 44ADA qualifies, but if sales exceeds 20 lakh, and if I have to apply for GST, does the income tax department recognize Merchant of Record platforms and can I simply show the amount I received as 44ADA income, no matter which part of the world the software is sold? Previously when providing software services to an American company, I received payments directly to my bank account and I had to mention the amount under foreign sources of income and mention my passport number since I didn't have a TIN number. How would the mention of such information change if I receive payments from a Merchant of Record? If I have to offer refunds to a customer via the Merchant of Record close to the end of March, would i simply have to declare only the amounts I received minus the refund amount in 44ADA and any other tax details are the Merchant of Record's responsibility and I won't have to worry about that? Would the same apply even for any advertisement revenue under 44AD?
Even if you haven't looked into Merchant of Record platforms, please do, because it'll give you a position of advantage when you talk to clients and can give them recommendations.
CAclubindia
