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Service tax on google services

Jigney (Others) (49 Points)

01 October 2014

Hello

From Today Service tax will be applicable on online services. We are Google AdWords partner where we collect google advertising budget from the client and pay to Google. Now Google will deduct 12.36% from amount we pay and remaining money will be used as advertising budget.

My question is how to bill customer ? Do we have to show service tax seperately what Google charges? Do we have to pay addinational service tax for Google advertising budget ? Since we are already charging for the services we offer for managing their account and pay service tax for the same.

Thanks in Advance.

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8 Replies

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 01 October 2014

Please clarify your mode of operation (stepwise)

how budget comes to you and

how u allocate and

whether you are doing these services on your own account or as an intermediary and

whether you are retaining money or gets only commission income?

Jigney (Others) (49 Points)
Replied 01 October 2014

Thanks for your reply . The steps included are as follow.

1) We recieve or get payment confirmation from the client.Payment is bifercated in two parts first Google Advertising budget and second Our service charge + service tax

2) We pay Google Advertising budget to Google from our account and Google allow us to advertise on behalf of our client.

3) Please note that Google do not pay any commission to us , we charge service charges from the client only.

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 01 October 2014

Whether on the bill amount is bifurcated as

Google Ad Budget Rs x

Your service Charge Rs x

Jigney (Others) (49 Points)
Replied 01 October 2014

Yes true

our service charge + service tax

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 01 October 2014

Ok...as per my understanding till now

Whatever you are paying to google can be said as your cost of providing services. Hence, ST deducted by google from your payment can be considered as Input SERVICE TAX.

You should charge Service tax on gross amount of the bill (inclusive of google advertising budget) and that will be payable to Central Government.

While paying service tax, you will be allowed to claim input of input service tax i.e. tax paid to Google from service tax collected from clients.

Remember : If value of services provided by you in FY 2013-14 does not exceed Rs. 10 Lacs, then service tax is not applicable on you during the FY 2014-15. In such a case, amount deducted by google will add to your cost.

Jigney (Others) (49 Points)
Replied 02 October 2014

Is there any other way since we are handling more than 100 individual accounts and would be very difficullt to calculate for each account that how much Google is deducting each day which is depends on how many clicks and what bid has been adjusted for that particular day.

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 02 October 2014

Originally posted by : Jigney
	Thanks for your reply . The steps included are as follow. 1) We recieve or get payment confirmation from the client.Payment is bifercated in two parts first Google Advertising budget and second Our service charge + service tax 2) We pay Google Advertising budget to Google from our account and Google allow us to advertise on behalf of our client. 3) Please note that Google do not pay any commission to us , we charge service charges from the client only.

1. Please clarify regarding your payment mechanism to Google.

As per above quoted communication you are paying google in lumpsum for their charges and now you are saying that you pay google on the basis of clicks per day.

2. Also clarify regarding your recovery mechanism from client :

As per my knowledge you recover on the basis of clicks. But at what time amount is recovered (Monthly/weekly)?

3. How Google adbudget is recovered (at beginning) or (monthly/weekly- i.e. along with bill)

4. You may also attach a copy of Bill for easy understanding and reference purpose.

Jigney (Others) (49 Points)
Replied 02 October 2014

Thanks for your mail. Kindly note :-

1. While we create account on behalf of our client, we give our own credit card details and Google deducts money directly from our credit card after spending of few hundreds or thousands.

2. Regarding recovery of the client that depends on relationship with client. Incase client is known to us we raise invoice and recover money from one to three months of period and if client is dealing with us for the first time in that case we take the same in advance.