Selling website
This query is : Resolved
18 August 2009
hi sir,
One of my friends wanted to sell his website. He has got a customer and is ready to pay. But he doesn't know about legal and income tax rules regarding selling his site to a foreigner for a price around five lakhs.He asked a few questions which i have listed below.
please answer :
* Does he need to generate Invoice.
* If Yes, does he need to mention Import-Export CODE (IEC) on the invoice.
* Does he get benefit of D.E.P.B.
* If yes, what are process.
* Is selling website, called selling asset or selling product. ?
* Is income, regular income or capital gain. If it is capital gain, then anyway to get exempted by investing.
* Any requirement of Service Tax or Sales Tax (VAT) ?
* And what about payment ? What should be the medium?
please answer complete formalities.
thanks
One of my friends wanted to sell his website. He has got a customer and is ready to pay. But he doesn't know about legal and income tax rules regarding selling his site to a foreigner for a price around five lakhs.He asked a few questions which i have listed below.
please answer :
* Does he need to generate Invoice.
* If Yes, does he need to mention Import-Export CODE (IEC) on the invoice.
* Does he get benefit of D.E.P.B.
* If yes, what are process.
* Is selling website, called selling asset or selling product. ?
* Is income, regular income or capital gain. If it is capital gain, then anyway to get exempted by investing.
* Any requirement of Service Tax or Sales Tax (VAT) ?
* And what about payment ? What should be the medium?
please answer complete formalities.
thanks
18 August 2009
Yes, He need to generate full Invoice
No need to maintain IEC account
I dont know
do
If its your busi product and else asset
I think Custom duty will play here
Route through banks
for more guide please contact GOOGLE
Please also cross check my answer as it may wrong in few cases.
No need to maintain IEC account
I dont know
do
If its your busi product and else asset
I think Custom duty will play here
Route through banks
for more guide please contact GOOGLE
Please also cross check my answer as it may wrong in few cases.
18 August 2009
please provide further details.
23 July 2025
Selling a **website to a foreign buyer** involves both legal and tax implications. Here are detailed answers to each of your friend's questions, based on Indian laws as they stand today:
---
### ✅ **1. Does he need to generate an Invoice?**
Yes.
He should raise a **commercial invoice** for the sale of the website. It’s a business transaction and must be documented, especially for international payments.
---
### ✅ **2. Does he need to mention Import-Export Code (IEC) on the invoice?**
Yes, if the sale is treated as **export of services or intangibles**, he must obtain an **IEC** from DGFT.
* IEC is required even for the export of digital goods or intangible assets (like websites, software, digital art, etc.).
* Apply through [DGFT portal](https://www.dgft.gov.in/CP/)
---
### ✅ **3. Does he get benefit of D.E.P.B.?**
No.
**DEPB (Duty Entitlement Passbook Scheme)** was applicable to **physical goods** and has been **discontinued since 2015**.
* Websites are intangible assets, not physical goods.
* So **no DEPB or similar export benefit** applies.
---
### ✅ **4. Is selling a website called selling an asset or product?**
It is **sale of an intangible capital asset**.
* If the website was **developed and held as an investment** → it is a **capital asset**.
* If the website was developed for regular trading (frequent buying/selling) → it may be treated as **stock-in-trade**, hence **business income**.
---
### ✅ **5. Is the income capital gain or regular income?**
It depends on **intention and usage**:
* **Capital Gains**:
If the website was **developed and held for long-term use** and now sold → taxed as capital gains.
* If held for **more than 24 months** → **Long-Term Capital Gains (LTCG)**
* Otherwise → **Short-Term Capital Gains (STCG)**
* **Business Income**:
If the person is in the **business of creating and selling websites**, then it is business income.
---
### ✅ **6. Can capital gains be exempted by reinvestment?**
Possibly **not easily**, since:
* Exemptions under sections **54, 54F, or 54EC** apply to **immovable property**, not digital assets.
* However, capital losses (if any) can be **set off**.
---
### ✅ **7. Is Service Tax or VAT applicable?**
No **Service Tax** or **VAT** today (both subsumed under GST), but here’s what applies:
* **GST** may apply if:
* He is registered under GST
* The sale is **part of business**, and aggregate turnover > ₹20 lakhs (₹10L in special category states)
> If registered:
> Sale of website to foreigner is treated as **“Export of Service”** under GST.
> GST **rate = 0%** (Zero-rated) if:
>
> * Payment is received in foreign exchange
> * Buyer is located outside India
**If not registered** and under threshold → No GST liability.
---
### ✅ **8. What about payment? What should be the medium?**
Payment should be received via **proper banking channel**, preferably:
* **Wire Transfer / SWIFT**
* **PayPal / Stripe** (if allowed under FEMA rules)
* **Through authorized dealer bank**
This ensures FEMA compliance and RBI reporting.
---
### ✅ **Additional Compliance Checklist**
| **Requirement** | **Status** |
| ------------------------ | ----------------------------------------------------------------------------------------------------- |
| IEC (Import Export Code) | Mandatory for export |
| GST | If turnover > threshold |
| Invoice | Yes, must issue |
| FEMA Compliance | Yes (for foreign remittance) |
| Bank FIRC | Get **Foreign Inward Remittance Certificate** from bank |
| TDS | No TDS applicable for sale to non-resident unless deemed royalty or technical service (unlikely here) |
---
### 📌 Summary
* **Yes**, invoice required.
* **Yes**, IEC required.
* **No DEPB** benefit.
* **Capital gain or business income** depending on nature.
* **0% GST** possible if treated as export.
* **No exemption under Sec 54**, but reinvestment relief not applicable.
* Use **formal banking channels** for receiving payment.
If you’d like, I can also provide:
* A **sample invoice template**
* A checklist of documents for IEC/GST
* A declaration format for export of intangible goods (for bank/RBI)
Let me know.
---
### ✅ **1. Does he need to generate an Invoice?**
Yes.
He should raise a **commercial invoice** for the sale of the website. It’s a business transaction and must be documented, especially for international payments.
---
### ✅ **2. Does he need to mention Import-Export Code (IEC) on the invoice?**
Yes, if the sale is treated as **export of services or intangibles**, he must obtain an **IEC** from DGFT.
* IEC is required even for the export of digital goods or intangible assets (like websites, software, digital art, etc.).
* Apply through [DGFT portal](https://www.dgft.gov.in/CP/)
---
### ✅ **3. Does he get benefit of D.E.P.B.?**
No.
**DEPB (Duty Entitlement Passbook Scheme)** was applicable to **physical goods** and has been **discontinued since 2015**.
* Websites are intangible assets, not physical goods.
* So **no DEPB or similar export benefit** applies.
---
### ✅ **4. Is selling a website called selling an asset or product?**
It is **sale of an intangible capital asset**.
* If the website was **developed and held as an investment** → it is a **capital asset**.
* If the website was developed for regular trading (frequent buying/selling) → it may be treated as **stock-in-trade**, hence **business income**.
---
### ✅ **5. Is the income capital gain or regular income?**
It depends on **intention and usage**:
* **Capital Gains**:
If the website was **developed and held for long-term use** and now sold → taxed as capital gains.
* If held for **more than 24 months** → **Long-Term Capital Gains (LTCG)**
* Otherwise → **Short-Term Capital Gains (STCG)**
* **Business Income**:
If the person is in the **business of creating and selling websites**, then it is business income.
---
### ✅ **6. Can capital gains be exempted by reinvestment?**
Possibly **not easily**, since:
* Exemptions under sections **54, 54F, or 54EC** apply to **immovable property**, not digital assets.
* However, capital losses (if any) can be **set off**.
---
### ✅ **7. Is Service Tax or VAT applicable?**
No **Service Tax** or **VAT** today (both subsumed under GST), but here’s what applies:
* **GST** may apply if:
* He is registered under GST
* The sale is **part of business**, and aggregate turnover > ₹20 lakhs (₹10L in special category states)
> If registered:
> Sale of website to foreigner is treated as **“Export of Service”** under GST.
> GST **rate = 0%** (Zero-rated) if:
>
> * Payment is received in foreign exchange
> * Buyer is located outside India
**If not registered** and under threshold → No GST liability.
---
### ✅ **8. What about payment? What should be the medium?**
Payment should be received via **proper banking channel**, preferably:
* **Wire Transfer / SWIFT**
* **PayPal / Stripe** (if allowed under FEMA rules)
* **Through authorized dealer bank**
This ensures FEMA compliance and RBI reporting.
---
### ✅ **Additional Compliance Checklist**
| **Requirement** | **Status** |
| ------------------------ | ----------------------------------------------------------------------------------------------------- |
| IEC (Import Export Code) | Mandatory for export |
| GST | If turnover > threshold |
| Invoice | Yes, must issue |
| FEMA Compliance | Yes (for foreign remittance) |
| Bank FIRC | Get **Foreign Inward Remittance Certificate** from bank |
| TDS | No TDS applicable for sale to non-resident unless deemed royalty or technical service (unlikely here) |
---
### 📌 Summary
* **Yes**, invoice required.
* **Yes**, IEC required.
* **No DEPB** benefit.
* **Capital gain or business income** depending on nature.
* **0% GST** possible if treated as export.
* **No exemption under Sec 54**, but reinvestment relief not applicable.
* Use **formal banking channels** for receiving payment.
If you’d like, I can also provide:
* A **sample invoice template**
* A checklist of documents for IEC/GST
* A declaration format for export of intangible goods (for bank/RBI)
Let me know.
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