Fire your tax related queries and i would get it solved!!!

[yoogi]

A) I am a shareware games programmer. Shareware is a software that is given away freely, and if user likes it, he can pay using creditcard. One third party purchases licence from me at Point Of Sale and Sells it to the user using their online payment processing, and pays me money after deducting their commision and VAT if any.

Is this a service taxable Revenue? I am of the opinion that it is a sale and not service.

b) The same third party also enables a affiliate system where I can promote other software by other programmers on my website. Any sale from my promotion gives me a pre-set commision. I dont know the nationality of the buyer or seller in any such transaction. Third party is American Company, also registered in Europe for VAT.

c). I display google Adwords ( the text advertisements with "ads by google" text on moneycontrol.com are also google Adwords.) and earn money from it. Is that Service Taxable.

d) I supply softwares (PDF files) or Puzzle contents (in digital information format..) and either gets a lumpsum for that or roylaty based on usage of the content. Is this service Taxable. I can design the contract in such a way that it is either "a software sale" or a "Royalty to Author".

e) I use service taxable services offered by foreigners. (webhosting expenses, link-advetisements...). The expense is a maximum of 100 k rs a month [correction: 100k rs a year]. Do I have to pay service tax for the services I used from foreign companies. Some of my earnings can be directed to paypal, (online payment service similar to a bank account..) and I use paypal to pay those expenses, thus the disclosure becomes voluntary.

None of a,b,c are above Rs 400 K in any of the assesment years.
As per my own understanding google adwords earnings is service taxable, but my earnings are very low $150 a month. Last year I recieved only upto 12 K for the whole year.

 

[diosys]

A) I am a shareware games programmer. Shareware is a software that is given away freely, and if user likes it, he can pay using creditcard. One third party purchases licence from me at Point Of Sale and Sells it to the user using their online payment processing, and pays me money after deducting their commision and VAT if any.

Is this a service taxable Revenue? I am of the opinion that it is a sale and not service.

b) The same third party also enables a affiliate system where I can promote other software by other programmers on my website. Any sale from my promotion gives me a pre-set commision. I dont know the nationality of the buyer or seller in any such transaction. Third party is American Company, also registered in Europe for VAT.

c). I display google Adwords ( the text advertisements with "ads by google" text on moneycontrol.com are also google Adwords.) and earn money from it. Is that Service Taxable.

d) I supply softwares (PDF files) or Puzzle contents (in digital information format..) and either gets a lumpsum for that or roylaty based on usage of the content. Is this service Taxable. I can design the contract in such a way that it is either "a software sale" or a "Royalty to Author".

e) I use service taxable services offered by foreigners. (webhosting expenses, link-advetisements...). The expense is a maximum of 100 k rs a month [correction: 100k rs a year]. Do I have to pay service tax for the services I used from foreign companies. Some of my earnings can be directed to paypal, (online payment service similar to a bank account..) and I use paypal to pay those expenses, thus the disclosure becomes voluntary.

None of a,b,c are above Rs 400 K in any of the assesment years.
As per my own understanding google adwords earnings is service taxable, but my earnings are very low $150 a month. Last year I recieved only upto 12 K for the whole year.

1.) it is sales hence not liable to service tax...

2.) Export of Service rules stipulates two conditions to be eligible for no payment of duty....a.) Service is provided outside India ....b.) It is brought in India in convertible foreign exchange...Check for yourself if you qualify both the conditions....

3.) Yes ads on money control site would be taxable as service tax as it is hosted and consumed in India itself....

4.) From budget 2007 content providers are also liable to service tax, hence i think you would get covered within the same....

5.)No service tax is payable on services paid to foreigners as their website is hosted outside the territorial limits of India.....

6.)Since you are below 8 Lacs in the preceding FY there would be no tax liability on you....

 

[Sriks]

Hi

What is the rate of tax on income from stock futures trading if:

1. done out of funds in NRO account?
2. done out of funds in SB account?

 

[Khushboo Jain]

Can someone tell me how are derivatives and structured products taxed? what are the LT and ST definition and which tax laws apply?

 

[yoogi]

1.) it is sales hence not liable to service tax...

2.) Export of Service rules stipulates two conditions to be eligible for no payment of duty....a.) Service is provided outside India ....b.) It is brought in India in convertible foreign exchange...Check for yourself if you qualify both the conditions....

3.) Yes ads on money control site would be taxable as service tax as it is hosted and consumed in India itself....

4.) From budget 2007 content providers are also liable to service tax, hence i think you would get covered within the same....

5.)No service tax is payable on services paid to foreigners as their website is hosted outside the territorial limits of India.....

6.)Since you are below 8 Lacs in the preceding FY there would be no tax liability on you....

.

Many thanks for clarification. No 4 is where I exceed the 8 lac limit.
On No 4, I will not be a content provider if I sell a software and it makes the content for client with limitation of use. (it is like instead of selling puzzles, I can sell puzzle software with the condition that they pay me per usage... All I need to make sure is that my invoices and their orders mention "puzzle creating softwares" instead of puzzles. Right?

In a sense it is a correct interpretation, as this is not something I specifically do for a client (service). I create a software that in turn creates the puzzle. I can either sell the puzzle or the software to book publishers. I would rather mark the sale as software, if that helps me pocket 14% more.

On 5) I was thinking that I need to pay the service tax.

on 3) one clarification though. I mentioned moneycontrol website because it also uses adwords advertisements and people can understand "google ads" concept from that.

However, I use it on my site where users are predominantly from UK and USA. Indian users are less than 3% (I can use my sales records to proove that). Advertisers are also mostly from similar countries.

(but when indians access my site, mostly indian advertisement will be shown.. That is the way google works to maximise benefit for advertisers.)

To avoid tax conflicts, can I create a mycompanyname.co.in site that I wont either promote nor market it, but can be used as a folly to make the real website 100% EOU.

Website is hosted outside india and target audience are US, UK and Australia. Will it be considered Taxabe service within India?

Most online sites by Indians, when it is intended for general audience also can claim that.
(A site about yoga for example..)

Another specific question: Also a Tour-Guide website about India, might be created with foreign audience in mind. It can be used by both foreign and Indian tourists. It might show google ads which are most likely to have Tour operators and Hotel bookings in India or Air ticket booking in country of a surfer or India. How this one will be considered?

 

[diosys]

Hi

What is the rate of tax on income from stock futures trading if:

1. done out of funds in NRO account?
2. done out of funds in SB account?

Dear Sriks...

Please clarify pertaining to whom are you talking.....An individual resident in India or a NRI ....

 

[diosys]

Can someone tell me how are derivatives and structured products taxed? what are the LT and ST definition and which tax laws apply?

Dear Khushboo...

I have already given a detailed reply to your query in my first page of this thread....It would depend how frequent is your trading to be classified as trader or an investor....

The tax law that applies is of course Income Tax Act, 1961...

LT and ST for the sole purpose of equity means that those securities kept for more than 1 year would be long term and others as short term....

 

[ramlaa]

Dear diosys,

Thanks a lot for the thread. So very informative

 

[kharikumaar]

dear all,

i have downloaded a nice excel sheet tax calculator by mr.nithya, which he has been posting on his site for some years. this is quite informative and can guide people on exemptions and deductions which can be availed.

it may have some mistakes , but it is right to a large extent.

since the file exceeds the forums limit i could not upload it

it can be downloaded from www.ynithya.com.


regards
hari

 

[diosys]

.

Many thanks for clarification. No 4 is where I exceed the 8 lac limit.
On No 4, I will not be a content provider if I sell a software and it makes the content for client with limitation of use. (it is like instead of selling puzzles, I can sell puzzle software with the condition that they pay me per usage... All I need to make sure is that my invoices and their orders mention "puzzle creating softwares" instead of puzzles. Right?

In a sense it is a correct interpretation, as this is not something I specifically do for a client (service). I create a software that in turn creates the puzzle. I can either sell the puzzle or the software to book publishers. I would rather mark the sale as software, if that helps me pocket 14% more.

On 5) I was thinking that I need to pay the service tax.

on 3) one clarification though. I mentioned moneycontrol website because it also uses adwords advertisements and people can understand "google ads" concept from that.

However, I use it on my site where users are predominantly from UK and USA. Indian users are less than 3% (I can use my sales records to proove that). Advertisers are also mostly from similar countries.

(but when indians access my site, mostly indian advertisement will be shown.. That is the way google works to maximise benefit for advertisers.)

To avoid tax conflicts, can I create a mycompanyname.co.in site that I wont either promote nor market it, but can be used as a folly to make the real website 100% EOU.

Website is hosted outside india and target audience are US, UK and Australia. Will it be considered Taxabe service within India?

Most online sites by Indians, when it is intended for general audience also can claim that.
(A site about yoga for example..)

Another specific question: Also a Tour-Guide website about India, might be created with foreign audience in mind. It can be used by both foreign and Indian tourists. It might show google ads which are most likely to have Tour operators and Hotel bookings in India or Air ticket booking in country of a surfer or India. How this one will be considered?

WHOA !!! this would exercise my mind a lot....let me study then reply !!!