Selling domain names comes under VAT or service tax ?

[Domain Monk]

Hey guys ...iam planing to open a brandable marketplace my auditor is saying domain names comes under service tax which is 14 % from this year in india .....any domainers from india can you advise

 

[VNA]

If you are planning to open a brandable marketplace where you would be listing others domains & charging a fee/commission, then it is a form of service so I think it would come under service tax. But to be sure,
get a second professional advice from another CA (other than your auditor).

 

[Domain Monk]

i will be mostly selling my domain names...i consulted 2 or 3 auditors they all said it comes under service tax which is 14 % ....this problem arrised when paypal asked for a biz licence ....i think i have to goahead with a service company ...does other domainers in india do this

 

[hn]

I think your business will come under service tax only if you cross business volume of Rs. 8 lakhs. You will need to pay tax on the commissions earned.

For example if you do a deal of say Rs. 5lakhs and your market place charges a commission of 5 % then on Rs. 25000 you will need to pay the service tax of 14%. Hence, it will be Rs 3500 which you will need to deposit to the service tax department.

This is only if you are doing a marketplace where in you allow others to list domains and do transactions.

I am no financial expert and this is based on my knowledge. Its advisable to consult an expert in the area.

 

[Domain Monk]

thanks guys

beside the market place as a freelance your selling domains more than 10 lakhs per annum , holding a biz a/c in paypal to verify a running biz ...what kind of biz licence will you show

 

[Domain Monk]

and in this marketplace..i will be selling my own portfolio not others domains but...my auditor says domains from july 2012 under indian tax law is a service and doesnt comes under sales ....taxation is 14 % for sales and 5 % for vat

 

[Suraj Soni]

yup if anyone purchase domains then they have to pay service tax, even with godaddy we pay service tax on every purchase.

 

[MarkMetric]

Hi,
I run a business apart from being a domainer, so, some pointers If you want to run you business professionally selling you domains and for others…

1. You will need a Business Bank Account ( Current Account )

2. To open a current account bank will ask you for 2 gov registration document ( Service Tax, Labour registration, business licence ect..)

3. Once you register for service tax you are exempted tax up to 10 Lakh only for the first year ( i.e.. if you do business for 5 lakh second year, you have to pay tax for 5 lakh )

4. Service Tax is currently 12.36% will go to 14 % once approved.

5. You will have to file service tax returns quarterly, failing which you have a hefty fines.

6 You will need a business account with Paypal or other gateway to receive payments into you current account.

This is all to painful to sell a few domains, If you want to sell only YOUR DOMAINS, the easy way out would be to show profit as income and just pay a income tax on it, you don't need to register for service tax as you are not providing service for others.

My 0.2 cents… hope it helps..

Os

 

[sahhilberi]

You will have to file service tax returns quarterly, failing which you have a hefty fines.

Service Tax Payment is Quarterly (Individual & Partnership)

Service Tax Return is Half Yearly


Thanks Sahil

 

[RapidNames.com]

the easy way out would be to show profit as income and just pay a income tax on it, you don't need to register for service tax as you are not providing service for others.

Great advice. Thank you so much.

Me & my friend invested on domain names together just like share market (60% mine & 40% my friend amount), if a domain is sold for 4Lacs, we both split the profit accordingly. Should we pay income tax only on our individual profits ?

 

[MarkMetric]

Great advice. Thank you so much.

Me & my friend invested on domain names together just like share market (60% mine & 40% my friend amount), if a domain is sold for 4Lacs, we both split the profit accordingly. Should we pay income tax only on our individual profits ?

You can show as income form other sources and pay income tax to individual profits ( you pay yours and he pays his )

 

[A G CHAUDHARI]

This only applies to Indian domineers those who sales domains..

The blank domain names (Without website) is considered as service of intangible entity (non goods/ non-physical entity)...

1. Service tax is applicable to all provided services. However, service tax is not applicable to export of services means (If your domain is getting sold out of India).

Below is the definition of export of service/ need to follow to exempt from service tax as per the Indian laws..

a) Service provider of service should be located in the taxable territory (here, India)
b) The recipient of service should be located outside India
c) The payment of such service should be received in convertible foreign exchange (Means, you should receive payment other than INR currency. For this, You need to maintain EEFC account (Exchange Earners Foreign Currency) in India that always deals in foreign currency)
d) the place of provision of the service should be outside India
e) the provider of service and recipient of service are not merely establishment of a distinct person

So If you follow above 5 points on domain sales. You will get exempted from Service Tax.
If you want to sale domains on regular basis its good to have EEFC account and follow the one time above points and get it exempted from ST.

2. VAT is applicable to goods/ tangible entities only not to services. Here, If you are selling blank domain name (Without website) its considered as intangible entity. So, VAT doesn't comes under picture.

Hope this will be helpful to all..

Refer India filings/ ask CA for more details and to get clarification...