Can anyone explains me the law of service tax under this situation.
I have a registered prop. company of "domain names trading" for which I am buying/register domains from Godaddy.com (US Server) and sell domains to:
1. Foreign Friend.
2. Indian Friend (Individuals)
If you are purchasing from Godaddy (India Billing Or USA Billing) :
1. If Godaddy not charged any service Tax to you then you require to pay Import of services tax as soon as you buy your first domain name (No exemption limit is applicable in that) .
2. Now for your sell :
A. To your Foreign Friend / Client If payment is received in convertible FX then counted as export of services so NO need to charge the service tax but you require to declare that in tax return as export of services. You can claim set off this against the already paid services taxes.
OR if you have one company out of India and one company in India and if you collect payment in India in INR then you require one specific permission from Reserve Bank of India ... for details you PM us but we donot think same is applicable to you as this option viable only when you have huge volume of sale.
B. To your Indian Friends/clients Tax applicable (MUST) but you can claim set off against already paid taxes for import of services.
