GoDaddy charging service tax on domain price in India

[Sumit Agrawal]

Hello All,

This is regarding 15% service tax that Godaddy is charging (in India) on domain purchase. By definition, service tax is charged only on service fees. So going by this, 15% service tax should be charged ONLY on domain renewal fee, domain registration fee or any other service provided by the registrar. This tax SHOULD NOT be calculated over product price (aftermarket domain price).

This miscalculation at Godaddy's end is in effect shooting up (by 15%) the domain purchase price quite drastically. So, if price of a domain is $2000, then effectively I'll (as an Indian buyer) have to pay $2300. More the price of domain, more will be extra amount that buyer will have to shell out.

Now, when I raised this issue with Godaddy team, they admitted it as an issue and after few follow-ups refunded the extra amount back to me. However, this where comes another issue.

In case of partial refund (only the extra service tax was to be refunded), Godaddy refunds the money in user's In-store credit account (instead of bank account). This means, you can use the refunded money only for Godaddy purchases and nothing else. Now, this is really irritating!

First of all, Godaddy is charging the service tax on domain price (due to problems in their system) and when after few follow-ups extra money is refunded, as a buyer I am forced to buy Godaddy's services/products from that refunded amount. Even if I want to use my money for any other purpose, I can't use it except for Godaddy purchases.

@Joe Styler can you please throw light on when should I expect this service tax issue getting resolved for Indian domain buyers. Because before that I will not prefer purchasing any aftermarket domain from Godaddy.

 

[anantj]

Older thread also present @

https://www.namepros.com/threads/15...sting-services-other-digital-services.988976/

and

https://www.namepros.com/threads/godaddy-introduces-15-service-tax-for-buyers-from-india.988978/

 

[ikhub]

Following the thread for @Joe Styler to respond.

 

[AIS01]

Like indian goverment Going to kill Us.

First Restriction is Paypal Limited account with auto Withdrawal And after That One by One.

Increase tax, Restriction and Many More.

 

[Sumit Agrawal]

Older thread already present @

https://www.namepros.com/threads/15...sting-services-other-digital-services.988976/

and

https://www.namepros.com/threads/godaddy-introduces-15-service-tax-for-buyers-from-india.988978/

The issue I am raising here is about 15% service tax being charged on domain price (instead of just domain registration fees or renewal fees). Service tax is charged on service fees and not on product price. Due to this miscalculation only, whole domain cost is drastically increasing.

Final domain cost should be = Domain price + (1.15 * domain registration fees)

whereas, according to Godaddy's calculation it is = 1.15 * (Domain price + registration fees)

 

[ikhub]

One thing I don't understand is, who pays the tax: the service provider or the service user? Did not see GoDaddy displaying their service tax registration number on site.

 

[anantj]

The issue I am raising here is about 15% service tax being charged on domain price (instead of just domain registration fees or renewal fees). Service tax is charged on service fees and not on product price. Due to this miscalculation only, whole domain cost is drastically increasing.

Final domain cost should be = Domain price + (1.15 * domain registration fees)

whereas, according to Godaddy's calculation it is = 1.15 * (Domain price + registration fees)

Yes. I edited my posts to change "already" to "also". I wanted to add additional context.

 

[Joe Styler]

Who are you speaking with who said this is an incorrect amount of tax to charge? It is my understanding that the tax is to be applied to all domain purchases including aftermarket transactions. We had multiple complaints when we rolled it out and had both our tax accountants and attorneys looked over the tax as well as an audit from a large outside audit company which both confirmed we should be charging the tax to remain in compliance with the Indian Government. I am sure there will be some comments in regards to this but I will not be able to comment as to what taxes should be paid beyond what I have said above, we looked this over very carefully and had an outside agency audit it as well when we were asked to look into it. We took it seriously and charge what we are required to charge. We collect the money and give it to the Indian Government. If you feel the money is being collected in error you should consult your own accountant or tax specialist who can help you when filling your taxes with the government and claiming what taxed you have paid. I understand no one likes to pay taxes, myself included which is why we triple checked the tax we charge. We have checked this issue very carefully and believe we are only doing what the law requires of us.

 

[Sumit Agrawal]

Who are you speaking with who said this is an incorrect amount of tax to charge? It is my understanding that the tax is to be applied to all domain purchases including aftermarket transactions. We had multiple complaints when we rolled it out and had both our tax accountants and attorneys looked over the tax as well as an audit from a large outside audit company which both confirmed we should be charging the tax to remain in compliance with the Indian Government. I am sure there will be some comments in regards to this but I will not be able to comment as to what taxes should be paid beyond what I have said above, we looked this over very carefully and had an outside agency audit it as well when we were asked to look into it. We took it seriously and charge what we are required to charge. We collect the money and give it to the Indian Government. If you feel the money is being collected in error you should consult your own accountant or tax specialist who can help you when filling your taxes with the government and claiming what taxed you have paid. I understand no one likes to pay taxes, myself included which is why we triple checked the tax we charge. We have checked this issue very carefully and believe we are only doing what the law requires of us.

Thanks for responding Joe. Meanwhile, foundation of my confusion lies in the definition of service tax, which clearly states that, service tax is levied on services offered and not on sale of goods.

Now my understanding is, a domain name falls under the category of "goods" (digital good) while its registration/renewal is categorized as "services". So, can you kindly confirm whether this understanding is correct?

 

[Joe Styler]

Thanks for responding Joe. Meanwhile, foundation of my confusion lies in the definition of service tax, which clearly states that, service tax is levied on services offered and not on sale of goods.

Now my understanding is, a domain name falls under the category of "goods" (digital good) while its registration/renewal is categorized as "services". So, can you kindly confirm whether this understanding is correct?

I can't I am not an accountant or a tax attorney. I can only tell you what the 2 teams of accountants and tax attorneys we used said which is what I stated above. We had a lengthy internal investigation as well as hiring an external firm to weigh in on the tax before making a final decision. I am not sure how it works in India, but in the US I have a tax accountant who helps me with my taxes, if I pay tax to a government entity that he deems I should not have paid then we contact them with proof of payment and are issued a refund on the amount of tax that is collected beyond what we owe.

I do not think we are wrong because I know how seriously it was looked at and that we had an extensive outside audit done, I read the audit results myself. However, taxes are complex which is why I personally use an accountant for my taxes, one I trust. So if you have questions beyond what I have stated, I would recommend you ask a good tax accountant or attorney that you trust.

 

[adrey]

I can't I am not an accountant or a tax attorney. I can only tell you what the 2 teams of accountants and tax attorneys we used said which is what I stated above. We had a lengthy internal investigation as well as hiring an external firm to weigh in on the tax before making a final decision. I am not sure how it works in India, but in the US I have a tax accountant who helps me with my taxes, if I pay tax to a government entity that he deems I should not have paid then we contact them with proof of payment and are issued a refund on the amount of tax that is collected beyond what we owe.

I do not think we are wrong because I know how seriously it was looked at and that we had an extensive outside audit done, I read the audit results myself. However, taxes are complex which is why I personally use an accountant for my taxes, one I trust. So if you have questions beyond what I have stated, I would recommend you ask a good tax accountant or attorney that you trust.

There is no vat between countries, and you started to charge vat.

 

[Joe Styler]

If you give me a receipt via PM I can have the tax team look at it.

 

[all4data]

Yes, I noticed today when going to renew domains that GoDaddy is now trying to charge tax on domain renewals. Mr Styler, are you able to assist us in sorting this problem out as we based in Europe. We have registered business number and tax number. Thanks in advance A4D

 

[Kuffy]

If GD is providing a sales introduction, then surely the tax is only on the service element. If they are selling a name on behalf of an owner, then the amount remitted to the owner is not a GD accountable element.

 

[Joe Styler]

Yes, I noticed today when going to renew domains that GoDaddy is now trying to charge tax on domain renewals. Mr Styler, are you able to assist us in sorting this problem out as we based in Europe. We have registered business number and tax number. Thanks in advance A4D

here is an article for adding your VAT ID to your account https://www.godaddy.com/help/add-your-vat-id-3409

 

[all4data]

Hi Joe, thanks for taking the time to work through this. I went through this process and placed the vat id in the requested spot and it came back as:

We are unable to validate your tax ID. Please review and re-enter.

in the past we have not been charged tax as we are based in Europe and therefore did not need to place our tax number in any orders.

Are you able to assist in getting this matter sorted out, please? Willing to chat in private message further

much thanks for your time, appreciated
A4D

 

[anantj]

here is an article for adding your VAT ID to your account https://www.godaddy.com/help/add-your-vat-id-3409

Anything for India?

 

[Joe Styler]

Hi Joe, thanks for taking the time to work through this. I went through this process and placed the vat id in the requested spot and it came back as:

We are unable to validate your tax ID. Please review and re-enter.

in the past we have not been charged tax as we are based in Europe and therefore did not need to place our tax number in any orders.

Are you able to assist in getting this matter sorted out, please? Willing to chat in private message further

much thanks for your time, appreciated
A4D

You can PM me and I will find someone who can help you.

 

[Joe Styler]

Anything for India?

Not that I am aware of, the countries make their own tax laws and this is specific to the E.U.

 

[DmitrySV]

I've updated my Godaddy account info with my TAX(VAT) ID, but is still being additionally charged with every order.