I have a differnt version. Information received by me from different sources say it is TDS. I am producing the notes that I have received in this regard: First note says: "....pl. note that amount payable to the foreign Vendors (in Forex) for subscribing online subscription/database is subject to Tax deduction at source as 'royalty' @ 20% under section 194J of Income Tax Act. Broadly speaking considering the royalty provisions, in the treaties with which India has entered into and the definition of royalty under section 9(1)(vi), TDS should be deducted under section 195 of the Act read with section 206AA of the Act. For example, suppose we have received a bill from Datamonitor for USD 8,800 towards online Subscription fees for one year. Now as per provision, IIMC is liable to deduct TDS @ 20% on USD 8,800 i.e. USD 1,760 and equivalent value in INR to be deposited to the Govt. and for each foreign remittance, IIMC has to submit Form 15CB and Form 15CA to the RBI who in turn will forward a copy to the Assessing Officer concerned" Second note says: "I am attaching two documents regarding the newly applicable TDS post union budget 2012-13. Section 9 of the Income Tax defines Royalty which was amended in the recent budget by adding three new explanations. Explanations 4,5 and 6. Before this amendment TDS was applicable to Royalty income only from the licensing of software and databases. After this amendment, TDS is made applicable to business income (inocme from sale of software and dtabase as product or service) also. TDS rate applicable for non-resident companies (Publishers of e-Journals/e-books/databases in your case) is availalble in various websites." I think we need to clarify first whether it will be service tax or TDS. Sincerely, -- Swati Bhattacharyya Librarian Indian Institute of Management Calcutta Joka, Diamond Harbor Road Kolkata - 700104 Ph: +91-33-2467-8300/01 (extn: O:416; R: 106)
Dear Colleagues,
I read Dr. Manjunath's mail with interest and concern. Coincidently this was followed by a phone call from our subscription agent indicating this fear. The agent also shared a document titled "PLACE OF PROVISION OF SERVICES RULES, 2012; NOTIFICATION NO. 28/2012 - ST, DATED 20-6-2012" wherein the definitions of the terms are elaborated and place of provision (who is responsible for payment of tax).
Unfortunately, I am unable to open the link / download the file indicated in Dr. Manjunath's mail (for that matter www.servicetax.gov.in itself is not opening) since yesterday.
However, I have been able to lay my hands on the pdf file titled "PROCEDURE IN SERVICE TAX UPDATED BUDGET 2010" and download the pdf file (search on google and download from www.taxclubindia.com/). A table in this document exists. Go to item 54 on page 4 is "On-line Information & Database Access or Retrieval Service" which was introduced in 16.7.2001 itself. So it is not new!
In the same pdf file, u/s 7.1 - which is relevant to current discussion - the last sentence reads as: "This provision is not applicable in case of individuals who have received such service other than for the purpose of use in business or commerce."
We (libraries) are obviously not receiving such services for business or commerce. And hence the payment of service tax, in my view, is therefore not applicable to us.
Since I am unable to download the file indicated by Dr. Manjunath, I can not comment on what is said in section 75 of that file. But section 75 of the Service Tax Act is on "Interest on delayed payment of service tax" and has nothing to do specifically with the "online information and database access or retrieval service".
Please correct me if I am wrong.
I vaguely remember that such service tax was charged by the then Insdoc for the services we availed in/around the year 2001 - when this service in the Act was introduced. I brought to their notice the above mentioned sentence and the concerned person in Insdoc (I do not remember the name) obtained confirmation from the Service Tax department that my interpretation is correct. I remember Insdoc then cancelled all the bills so raised and never charged such a tax.
Regards, - Tapaswi
-----Original Message----- From: lis-forum-bounces@ncsi.iisc.ernet.in [mailto:lis-forum-bounces@ncsi.iisc.ernet.in] On Behalf Of G.K.MANJUNATH Sent: Thursday, October 18, 2012 12:24 PM To: lis-forum@ncsi.iisc.ernet.in Cc: manlibnet Subject: [LIS-Forum] Service Tax of 12.36% on Online information anddatabases
As per the Govt circular, based on the Finance Act, 1994, all 'Online and off-line products' will now attract a service tax of 12.36%. Earlier these products / services were under negative list. Such a change in the policy will put pressure on the already constrained library budget.
In view of this policy change, most of the vendors have postponed forwarding subscription to the publishers with an assumption the Govt may withdraw the change and it seems have also made representation in this regard.
As we are gearing up for next year renewals, the matter will be of serious concerns to all of us. Please refer to section 75 of the below mentioned circular :
http://www.servicetax.gov.in/st-act-upd-dec10.pdf
It says "on-line information and database access or retrieval" means providing data or information, retrievable or otherwise, 5[to any person], in electronic form through a computer network"
Our regular vendors have already indicated that, henceforth, libraries need to pay a service tax of 12.36% for renewing online journals and databases.
I highly appreciate further debate on this issue. Can our associations and consortia coordinators, take up this matter immediately with the concerned Department/ Ministry to seek exemptions ?
thanks,
Dr.G.K.Manjunath Chief Librarian Indira Gandhi Inst of Development Research Film City Road Santosh Nagar Goregaon(East ) MUMBAI - 400 065 India Phone: 022-28416528 email: gkm@igidr.ac.in
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