Questions about online services.

440 views 2 replies

Ashwani

none

24 Points Posted on 05 February 2011

Hello,

I'm not sure if this is the correct place for my query so please bear with me.

I have just received my PAN and have not filed any return till now.

I have recently started an online business which does the following :

I rent computers all over the world ( not in India though) on a monthly lease basis.

I then re-rent these computers to clients all over the world ( again .. none in India ) on a monthly basis.

The computers are never physically moved anywhere.

The monthly transactions are to the tune of 10,000USD per month in receipts and about 6,000 USD in payments.

This is a personal side business for extra pocket money and this business is not conducted under any company name.

My question :

What taxes am I liable to pay and under what headings ?

Should I be registering for a Service Tax Number ?

Replies (2)

DMC

Student

364 Points Posted on 06 February 2011

Your annual profit is around USD 48,000 which when converted into INR is around Rs 22,00,000. Your gross receipts are around USD 1,20,000 which when converted into INR are around Rs 55,20,000.

According to me considering the amount of your transactions, you should take professional advice from a Chartered Accountant or a Tax Consultant who would solve all your queries.

Your global income is taxable in India since you are a resident in India and this income will be subject to Income Tax. You should also look at withholding tax implications under Section 195 of the Income Tax Act, 1961 as you are making payments to non-residents.

Renting of computers can be covered under the service category supply of tangible goods. However since the goods are not supplied to anyone in India, the receipts from such transaction will not be subject to service tax. Consequently, no service tax registration number should be obtained.

My comments are based on the basic understanding of your situation and I reiterate that you should obtain professional advice from a Chartered Accountant.

U S Sharma

glidor@gmail.com

21068 Points Posted on 06 February 2011

assumed that its related to "renting of SERVERS" hence service tax applicable,

however he can avail the benefit of "export of services" subject to fullfilment of specifed criteria, for more details visit your nearest service tax office.