This documentation is for Taxamo v1. If your account is with Taxamo v2 use the documentation at integrate.taxamo.com/doc.
If you are uncertain of your version please contact support@taxamo.com for assistance.

How do suppliers prove their consumer’s location in India for service tax purposes?

According to the Indian service tax legislation on cross-border B2C supplies of digital services the person receiving such services shall be deemed to be located in the taxable territory (in this case India) if any two of the following non-contradictory conditions are satisfied, namely:

  • Address: The location of address presented by the service recipient via internet is in taxable territory.

  • Payment card details: The credit card or debit card or store value card or charge card or smart card, or any other card by which the service recipient settles payment has been issued in the taxable territory.

  • Billing address: The service recipient’’s billing address is in the taxable territory.

  • IP address: The internet protocol address of the device used by the service recipient is in the taxable territory.

  • Bank details: The service recipient’s bank in which the account used for payment is maintained is in the taxable territory.

  • Mobile SIM card country code: The country code of the subscriber identity module (SIM) card used by the service recipient is of taxable territory.

  • Fixed landline: The location of the service recipient’s fixed landline through which the service is received by the person, is in taxable territory.

Do foreign suppliers need to charge service tax on sales to India-based consumers?

Yes, they do. The service tax rules changed on December 1, 2016, and are now focused on the location of the consumer of the services rather than the location of the suppliers.

Is there a service tax registration threshold?

Yes, in certain circumstances. Companies supplying digital services to India-based consumers need to register within 30 days from December 1, 2016, if they crossed the threshold of Rs.10 lakh in the previous financial year, i.e. in 2015-16 for provision of any taxable service in India and service tax liability would arise after crossing the threshold.

What remote services are in scope for service tax in India?

The following digital services where the supply is essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology come under the scope of the new India service tax legislation:

  • Advertising on the internet;
  • Providing cloud services;
  • Provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;
  • Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
  • Online supplies of digital content (movies, television shows, music, etc.);
  • Digital data storage; and
  • Online gaming.

NOTE: This list is not exhaustive and is to be used as a guide to what digital services come under scope of the Indian rule change.

What is the Indian service tax rate?

The service provider would charge a total tax of 15%. The 15% tax is a combination of service tax 14%; Swachh Bharat Cess 0.5%, and Krishi Kalyan Cess 0.5%.

How do I register for service tax in India?

Firstly, registration of international digital service suppliers to India-based consumers is now mandatory. If the digital service supplier does not have a physical presence in India, then they can register themselves or appoint an authorized person/agent to comply with the service tax laws and remit tax to the Government.

If a supplier is represented by an authorized person or agent, then such a person may be allowed to take the registration on behalf of the service provider and then comply with all service tax provisions on behalf of the service supplier.

Service providers need to make an application in the ST-1A form to the jurisdiction of LTU Bengaluru (the designated Indian jurisdiction for these cases).

The following details are to be provided in this application:

  • Information as per the incorporation details in the country of incorporation
  • Details of directors/partners/proprietor and authorised signatory
  • Details of agent/ representative in India (if appointed)
  • Documents evidencing details to be sent via email

Registration is deemed to start on the day of submission of the application.

How do I enable service tax for India in Taxamo?

Assuming your product/services qualify as digital goods/services in India, then complete the following steps:

  1. Log into the Taxamo Merchant Portal and go to: My account > Tax regions.
  2. Enable in test mode or live mode for the relevant dates.
  3. Enter your service tax number. Here you also have the option of proceeding without entering your service tax number. You can add the number once you have finalised your registration with India’s tax authority.

Notes: A. If you are below the India registration threshold you can continue sending all of your transactions to Taxamo. We will send an alert when the value of sales to your India-based consumers approaches the threshold limit. At which time you should turn this region on in your Taxamo account settings.

B. If you are using an integration other than the Taxamo API or the Taxamo checkout form, please confirm that your integration type has been upgraded to support India.

How do I pay the service tax due to the Indian tax authority?

Affected suppliers of digital services need to file ST-3C returns online. The returns are filed via electronic banking here.

How often are service tax returns filed?

Companies need to file two returns per year, but payments are to be made on a monthly basis.

The service tax return itself is due by the 25th of the month after the end of a six-month period.

However, the monthly payments are due by the 6th of the month after each month: this means that there is a very short calculation and payment period each month. For example, for the period April-September 2017 the service tax return is due by October 25. For the period October 2017 to March 2018, the service tax return is due by April 25, 2018.

What are the rounding rules for the service tax return?

Service tax (including interest, penalties, and refunds) is to be rounded off to the nearest rupee. 50 paise or more should be rounded off to the next rupee and less than 50 paise should be ignored. More information available here.

How long should data be retained for audit purposes?

The data to be recorded is limited to what is required to satisfy that the tax for each digital service supply has been charged and accounted for appropriately.

The information that is available to service provider in the course of their normal business activity would be relied upon. This would be limited to:

  • The type of service supplied
  • Date of the service supply
  • The service tax payable
  • Information used to determine the place where the customer has their usual residence.

How can I contact the Indian tax authority?

The relevant authority in India is the Customs Board of Excise and Customs (CBEC).

The CBEC is mandated to collect service tax for the Government of India. All details regarding policy, rules, regulations, notifications etc are available here.