Service Tax of 12.36% on Online information and databases
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.
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 -- 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 message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean.
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
-- 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 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
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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. If you are not the intended recipient, do not take any actions based on the contents of this message, except to permanently delete the message and its attachments and inform the sender immediately. ************************************************************************************************* -- This message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean.
Dear Madhuresh, Thanks for the details. I have been writing to the foreign vendors too but so far all are silent. My fear is if we forcefully deduct the TDS they may stop the service. What is your experience with foreign vendors so far after deducting TDS? -- 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 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. If you are not the intended recipient, do not take any actions based on the contents of this message, except to permanently delete the message and its attachments and inform the sender immediately. *************************************************************************************************
-- 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
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participants (4)
-
G.K.MANJUNATH -
madhuresh.singhal -
Murari Tapaswi -
swati＠iimcal.ac.in