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Income tax / service tax on .com domain sale

goyal (manager) (32 Points)

19 April 2012

Hi all,

I have received an offer on a .com domain name that is registered in my name (domain name only, no associated website).

The payment will probably be made by wire transfer, to me , an individual, not a company.

Please help me with these issues:

What would be the taxable portion of the payment?

Would service tax/any other tax have to be paid on this?

What kind of documents would be required to be asked from the buyer as far as tax records are concerned?

In such a case, what would I enter in my returns as PAN of the buyer, since he's not Indian citizen

Thanks,

R. Goyal

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8 Replies

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 20 April 2012

I believe this is an EXPORT of service provided by you to a Non - Resident.

Hence, no service tax would be attracted on this.

As for Income Tax records, you don't need to mention PAN separately of the buyer.

Your Invoice and payment advice will suffice.

Regards

Prateek

1 Like

goyal (manager) (32 Points)
Replied 20 April 2012

Thanks a lot for the reply, Prateek.

Assuming this is just a one-off sale, how do I classify this income? business income?

what would be the rate of taxation?

Would my itr return form change because of this income (I'm current filing itr2)?

goyal (manager) (32 Points)
Replied 20 April 2012

Sorry Prateek, one additional question:

I'm selling this domain thru Sedo which has 15% brokerage charge as well as 3% escrow charge.

Can I deduct these charges from the taxable part of this sale?

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 21 April 2012

If you are into the business of selling domain names then it would be business income.

All charges like brokerage and others can be deducted.

Since it is business income, you have to file ITR-4.

1 Like

goyal (manager) (32 Points)
Replied 21 April 2012

Thanx again Prateek:

Just two final followon questions:

1) If I am not into the business of selling domain names, how would the sale of just one domain under my individual name be classified/taxed (I am a regular salaried individual)?

2) If I decide to go into domain name selling business later on, would I have to officially register a business under a company name to pay taxes on business income, or can I do it under my individual name itself?

Thanks and Kind regards, Goyal

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 21 April 2012

If you are not in a business of seling domain names, then treat it as Income from Other Sources and continue filing ITR - 2.

You can start a Proprietorship business and sell domain names within that only and continue to salaried as well. In that case, domain name income will become business income in your prop business. Salary will be in your individual account. Then you have to file ITR-4. Only, you have to maintain separate accounts for your Individual A/c and Proprietorship A/c.

1 Like

goyal (manager) (32 Points)
Replied 21 April 2012

In case I do this regularly, which would be advantageous to me?

Filing as 'other sources' or as 'business income'?

What would be the advantage?

Thanks again, Prateek.

Rishabh Ahuja (.) (491 Points)
Replied 21 April 2012

see my friend

its like if at all u go into dealing with all this

treating it under business head will be better cz their are certain exemptions available under that category

secondly what i personally feel here is that u holding a domain is more of an asset for you as per teh definition of an asset and should therefore be taken under capital gain and yeah where in your sellinge exenses will also be allowed while calculation net consideration

rest to be assured i ll advise to repost the query in the expert section !