Dear All, I am already dealing with this situation from past 6 months and I would like to add further in this debate topic. Service Tax is applicable if you take online subscription product from Indian vendor. In the case of direct subscription from foreign publishers, where you make the payment outside India in foreign currency, as per new Tax law, Libraries are supposed to deduct 10% or 20% TDS while making payment (10% if foreign publisher take Indian PAN number else 20%). None of the publishers are having PAN (except a few), so in most of the cases deduction would be 20%. This is not acceptable to publishers, but as an Indian entity we have to follow this else we will not get Auditor's certificate for making payment (please note that banks require CA Certificate to process all foreign payments). If publisher doesn't provide PAN and ask us to bear tax as he wants full payment, we need to gross up the whole invoice value, where we need to take hit of 25% extra of the invoice value in order to make full payment to publishers. The best solution is that publishers should take PAN in India and we shall deduct 10% while making payment. In turn, we can issue a certificate to publishers confirming that we have deducted 10% TDS and paid to Tax authorities in India. Publishers can set off this amount while filing their returns in their respective countries, so there is no loss for them as well. This requires a little more documentation from publisher's end probably while filing returns and for taking PAN, which they perceive it difficult. However in order to save our budget and have a win-win situation, they should do this. I request you all to have a combined effort to make publishers agree for this and I request you all to not to bear TDS (if you are doing so, and some publishers are expecting us to bear this mentioning the agreement signed by us in past). I already pushed this to few publishers I am dealing with to take PAN in India and awaiting their responses and hope they will agree. A little push from others may also help. This will make everyone Tax compliant. Please note that above provisions may differ as per Invoice originating country and will be govern by Double Taxation Avoidance Treaty (DTAT) provisions signed by Indian Govt. for each country. For example, normally tax rates are 10% or 20%, but it may differ country-wise. Also Online information access may not be covered under "Royalty" and it may be part of business income, so it will not be taxable in India. Also, there are some specific decisions of different High Courts where they ruled that online access to information is not tax deductible, like Delhi and Mumbai. So you need not deduct TDS if you are in those states. Karnataka High court decision is reverse and so it is TDS deductible. Service tax and TDS are different and service tax is applicable if you are taking services of Indian vendor for online access to information and if vendor is invoicing in INR. Best Regards Madhuresh Singhal Senior Manager - Knowledge Services Advinus Therapeutics Ltd (A TATA Enterprise) 21 & 22, Phase 2, Peenya Industrial Area, Bangalore - 560058 Phone: +91 80 66553106 E-mail: madhureshsinghal@yahoo.com -----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 -- This message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean. _______________________________________________ LIS-Forum mailing list LIS-Forum@ncsi.iisc.ernet.in http://ncsi.iisc.ernet.in/mailman/listinfo/lis-forum ************************************************************************************************* This email and its attachments are confidential and proprietary to Advinus Therapeutics Ltd. and are meant for the intended recipient only. 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