Is your website a startup? You may be shocked when you come to know all of a sudden that your e-commerce website, or the products/services you plan to sell or already selling at your website fall into the purview of Service Tax.
Why shocked in India? If you need to pay service tax then you face following consequences:
In fact Service Tax may not be related to Payment Gateways. But yes, if you’re making money selling anything, then you must look around.
Let’s explore what actually is a service tax.
“As per the Finance Act of 1994, all service providers in India, except those in the state of Jammu and Kashmir, are required to pay Service Tax in India. The provisions related to Service Tax came into effect on 1st July, 1994.”
Read the Service Tax FAQ, 2010 here.
Understanding Service Tax rules is complicated, even if you try to understand one rule, it may not be sufficient but it might have been already overruled in another circular which you are not aware of! For example how do you determine the value of product/service which your selling which should be used for calculating service tax on? Read here to find out the value of product/service for service tax.
Please find the sample list:
You should first find out what all products/services you are selling fall under service tax purview. They may fall under service tax purview but due to some exemption, you may not pay service tax at the moment. However this exemption may go at anytime. Or if a new exemption may be introduced at any time. So you must check with your service tax consultant at regular intervals. You should also try to find how you can minimize /evade service taxes by legal means. This may include changing the ownership of the company. If you have evaded service tax knowingly or unknowingly, beware of the maximum penalty that can be levied. Do try to understand the reason why service tax applies to your services or why they are exempted — this is not needed you’ve a full time consultant working for your ecommerce site.
This article is brought to you by Utilities India. Utilities India is offering Service Tax Legal Consultancy too. Get your Ecommerce site valued in the purview of Service Tax only for Rs. 1200/- by a tax consultant with more than 20 years experience working in Indirect Taxes.
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