Service Tax and Domain Names- India

From 1st of July, 2012 Service tax came into effect in India on Domain names (All TLD's) @ 12.36% (12% towards Service tax and 3% (of tax) towards education and Secondary & Higher Education Cess). Every entity who is providing services from India requires to pay service tax. (Details of service tax can be obtain from Govt. official website)

As per law every Indian registrar/reseller/customer requires to charge service tax to their customers and resellers and then can pay difference to tax authorities, example : suppose if .IN registry sells a domain name at INR 100 and tax is 10% (for example) then every registrar will get it in INR 110. (These tax rates are for example only)

Now there is two scenario A. Some Out of India based registrar counts their cost at INR 110 and sells their customers accordingly. They donot charge any further tax to any customer as they count that they are out of India and service tax is not applicable to them. B. Now if India Based registrar sells it to their customers, say in INR 130 then they require to charge service tax to their customers as mentioned in example above and their customer will get domain name in INR 130 Plus 10% tax as per example.
So in customers hand domain name will comes at INR 143 , Now Indian Registrar when filing tax returns they will say INR 10 tax already paid by them at the time of purchasing the domain name from registry and they collected INR 13 as tax from customer so the registrar requires to pay the difference of only INR 3 To Tax authority.

Service tax is applicable to every sale instance within boundaries of India if service provider is located in India.

NOW Lot of questions are asked by customers and resellers about the same and how this tax will effect their sale etc.: Here is the detail :

1. If you are India based customer and reseller then this tax is unavoidable to you , No matter you purchase the product from Indian registrar or foreign registrar.

.In registry charging service tax to all registrars irrespective of their country of origin. So No matter if it is Enom, Godaddy , resellerclub, Mitsu or Net4india everybody pays service tax on domain name in advance to .IN Registry.

Now question arises that why some registrars are charging service tax and others are not charging to their customers/resellers ?

Some of the registrars who donot have any physical presence in India like Enom are absorbing this tax into their cost and they are offering domain name to customer/reseller at a particular price and they are not further charging any tax to their customers and resellers.

IMPORTANT :Now IF any India based reseller or customer purchases domain name from these out of India based Registrars then the India based customer or reseller requires to pay the service tax on purchase (import of services) and also requires to charge to their customers , for example if you (India based reseller or customer) buy .In or any other extension from out of India based registrar without paying any service tax then you require to pay the tax on purchases also (import of services) and while selling again you have to charge your customers and then you can ask for credit from tax dept. but this way you are charged more and compliance requirement comes on you.

But if you are India based reseller or customer then simply purchasing a domain name with India based service provider is far better option as you will get tax certificate and you can also charge to your customer and requires to pay the difference to tax authorities.


What about Mitsu?

Mitsu have both options available to our resellers and customers. We are not charging any taxes to our out of India based customers but charging service tax to only India based resellers and customers.

Very soon we have other options available.


India Based customer or reseller can call us to get more details on this issue.
 

delhidude

New Member
So as per you its Service Tax on "Value Addition". However Value added Tax (VAT / MODVAT) are always on products, because by definition services can not be re-sold. Eg, you buy the service of a barber, you can not resell that service. I see something wrong somewhere.
 
You are right , in first place domain name cannot be treated as service ? But when .In registry counting domain name as service then it has become necessary to all registrar and resellers to count it as service.
 

Jeff

Administrator
Staff member
Country flag
Stuck the thread. Very important information and thanks for the clarification!
 

alok897

New Member
This is nice information share by you about service tax in India for domain registrar and registration company.
 

itssri

New Member
So as per you its Service Tax on "Value Addition". However Value added Tax (VAT / MODVAT) are always on products, because by definition services can not be re-sold. Eg, you buy the service of a barber, you can not resell that service. I see something wrong somewhere.
"Domain name registration" is a yearly rental system, not a tangible product (like say a computer), hence is a service. We register a domain name for a finite period and hold rights to it for that period (unless of course if we are not trespassing anyone's TM).

Value addition? The registrar does that by providing DNS or forwarding and maintaining/managing your record(s) with the .IN registry. The registry does not deal with end-users directly.

Now, taking your example of barber, it's like booking a seat at the saloon (the registrar is just an agent) and selling it to others at same value or for premium (or even a loss) depending on demand ;) Now you see why many people hate domainers who resell domains at premium!

Domaining is a very complex field with a very thin line between ethics and legality. On one side it is like registering* a piece of land and selling at premium and on another side it is like selling movie tickets in black.

*Registering land in India: you don't really own land in India, but get it on lease from the government for 33 years. And, there are a lot of caveats!
 
Last edited by a moderator:

ecomindia

Phir bhi dil hai hindustani!
Country flag
*Registering land in India: you don't really own land in India, but get it on lease from the government for 33 years. And, there are a lot of caveats!
i think your made good points except for this.

Domaining is a very complex field with a very thin line between ethics and legality. On one side it is like registering* a piece of land and selling at premium and on another side it is like selling movie tickets in black.
That's true with any industry
 

the_poet

Well-Known Member
Country flag
Domain names are no more than software licensed for a limited period of time. So, in order to classify them as a service or products, you need to refer the same doubt to software.
 
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