Weird tax liability situation ?

Page no : 2

Shalini Agarwal (CEO) (82 Points)
Replied 12 October 2011

Originally posted by : vikas Agarwal
	Never Treated As Capital Gain

Then ? it's an e-asset/business earning regular income.

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Krishnan (NA) (32 Points)
Replied 12 October 2011

Hi Shalini,

My take on this:
- The US company might have bought your add on based on the user base, however that is a business decision. As per income tax it is still a sale.
- Now the next question is whether you sold an "asset" or a product. In your case it is clear that you are a sofware development company. The add on therefore becomes a product. Any income from its sale will fall under Profits of gains from Business or Profession
- Any donations that you recieved from users who used the software is still business income (even though they are not mandated to pay)

Regards

Shalini Agarwal (CEO) (82 Points)
Replied 13 October 2011

Originally posted by : Krishnan
	Hi Shalini, My take on this: - The US company might have bought your add on based on the user base, however that is a business decision. As per income tax it is still a sale. - Now the next question is whether you sold an "asset" or a product. In your case it is clear that you are a sofware development company. The add on therefore becomes a product. Any income from its sale will fall under Profits of gains from Business or Profession - Any donations that you recieved from users who used the software is still business income (even though they are not mandated to pay) Regards

I am not a "software development company" but an individual devloper, I make my own ideas and software's.

Krishnan (NA) (32 Points)
Replied 13 October 2011

That would not change the fact that the transaction is taxable. It only changes the person who has to file the returns. In your case it would be you (compared to a company filing it).