CBEC to impose 15% tax on purchase of music, e-books from overseas portals

People of India are getting many shocks this month. After the announcement of the ban on big notes, another one has added to the list. The latest one will be hurting only one section of people.

All the users who are downloading or buying e-books, music, movies from overseas websites will have to pay 15% of service tax. Other services like cloud sharing, e- games, internet advertising, software and other intangible products would also come under the tax payable list.

This new service tax policy will be in the force from 1st of December 2016. The Central Board of Excise and Customs (CBEC) has changed the existing ‘Place of provision of service’ to the ‘Place of the recipient.’ The change to the old amendment was done on November 9th by the excise board.

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So from now all the above-mentioned downloads in India will be subject to service tax. The amendments impact overseas companies were providing various services like advertisements, web subscriptions, cloud hosting, music, e-books, and gaming, to name a few. These services provided to governments and individuals were earlier not subject to service tax. They now become taxable, and the overseas service provider or any intermediary or authorized representative will need to register in India and pay the service tax,” said Sunil Gabhawalla, Charted account expert.

The definition of ‘Online Information & Database access or retrieval services’ was also changed.The revised definition states that those 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.”

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The Current Taxation Process Before this change in the amendment. The existing practice will be like if the supplier locate in overseas. And the buyer who can either individual, government, local body based in India then there is no charge on service tax.

So the current changes will put more burden on the e-buyers who are purchasing from abroad sellers. This will increase their bill depending on the purchase or subscription. So e-buyers beware of this extra tax before buying from foreign portals.

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