I congratulate Dr. Arora for taking such a decisive step. Can I urge all professional associations to make similar appeal to the Ministry? I am not sure to which Ministry the appeal should go. I feel it should be both to MHRD and Ministry of Finance who sets the rule. Best regards, Swati Bhattacharyya, Ph.D. Librarian Indian Institute of Management Calcutta Joka, Diamond Harbor Road Kolkata - 700104 India Phone: 91-33-2467-8300 (Bus extn: 416; Res extn: 106) Library: http://library.iimcal.ac.in On Fri, Jul 4, 2014 at 1:14 PM, Sathya wrote:

*E-books/E-Journals/Databases – Subscription/Purchase/Licensing - Tax Worries of Libraries/Publishers/Agents*

It is appropriate time to re-visit the reply by Mr Madhuresh responding to a question raised by Mr Jasimudeen of Kerala. What Madhuresh tried to explain is true but the problem is far complex and requires urgent action by Library community and Publishers/Agents Associations. The following developments are important to observe in this context:

1. It is a public knowledge now that last year INFLIBNET was issued TDS recovery notice by the Income Tax Department in Ahmedabad with retrospective effect under the amended law of 2012.

2. As most of you would be aware, Informatics stopped handling orders for e-Journals/e-Books of third-party publishers like Springer, Wiley etc. except for those publishers who were willing to let us comply with the amended tax laws of our country in distributing their e-content. We had to forgo significant part of our e-content distribution business built over several years due to many foreign publishers’ unwillingness to accept the orders without TDS deduction. But, that was OK with us, as our Company has zero tolerance to any violation on matters of statutory compliances.

3. Developments like the above were the result of an amendment to Tax Laws in the 2012-13 central budget. The amendment to section 9 (1)(vi) of Income Tax Act that deals with payment of royalties brought payments for subscription/purchase/licensing of software and databases under deduction of TDS (10-25% depending on the country) while making payment. This is draconian and would cripple any buying of e-content if followed as required by the law. Imagine, if you are paying 200 euro to a small French publisher who doesn't understand our law, you will have to deduct 15% as TDS, pay that to the Indian tax department and issue a certificate to the Publisher along with your payment. The French publisher is expected to claim this deducted money from his Government using your certificate! And to qualify for 15% deduction and re-claim it from his Government, the publisher will have to register with the Tax Department and obtain PAN. Otherwise, the library will have to deduct 25% and the publisher will not be able to claim the deducted amount.

4. We at Informatics tried to educate the market against this bad law, made representations to the Government, requested our big clients, publishers' associations and library associations to lobby strongly with the Government for seeking exemption from this amendment for educational e-content. Unfortunately it was a lone battle.

5. Last year in NIMHANS a group of Librarians arranged a well-attended seminar and debate on this issue more as a public awareness seminar inviting Tax consultants and legal advisors. A few publishers from Delhi also attended.

*FACTS OF THE MATTER:*

6. As per the amended law under Section 9(1)(vi) of Income Tax Act E-books/e-journals, which are like any computer searchable databases attract TDS: (a) When Libraries make payment to vendors; or (b) When Vendors make payment to their Suppliers, whichever may happen earlier. Vendor or his Supplier can claim the deducted amount while filing his tax returns depending on the point of deduction

7. In case of purchases from foreign publishers, the matter is a bit more complex as the deducted amount is a revenue to Indian Government but not a loss the foreign supplier as he could claim it from his Government. The complexities are:

(a) The deduction falls under a treaty called Double Taxation Avoidance Agreement (DTAA) between India and several other countries

(b) While The Indian Government has amended its Tax Laws to bring payment for software/databases under TDS, the corresponding DTAAs are not amended.

8. Because the corresponding provisions of DTAA is not amended foreign publishers/suppliers dispute the applicability of TDS and rightly so. But, Indian Libraries/Agents will be violating the Indian tax laws if they fail to apply TDS and will attract penalization by tax department.

9. Indian Agents involved in supplying foreign published e-books/e-journals are caught in a proverbial devil-and-deep-sea situation. TDS by Indian Libraries will make their business unviable, as their commission margins will be invariably less than TDS amount. They can't accept/place orders if the foreign supplier refuses deduction.

10. For Libraries situation is no different from Agents except that a few big publishers who have PAN registration in India accept deduction, but a large majority of foreign publishers refuse deduction.

*SOLUTION*

A. The new Government appears to have an open mind to review the bad laws of the past that are totally unfriendly to development.

B. The new Government has also recognized e-Libraries as a development priority in its party manifesto.

C. The Budget session will start soon beginning July 10. Before this date, Library Associations and Publishers Associations should jointly or severally submit a strong memorandum to the Finance Minister and HRD Minister requesting for either rolling back the amended law under section 9 (1)(vi) of Income Tax Act or exempting e-book/e-journal purchases from TDS deduction.

INFLIBNET, as we understand, is presenting an appeal to the Government through HRD channels to change this law or exempt libraries from the applicability of this law.

The knowledge community of India interested in building e-Libraries would like to solicit the cooperation of all concerned to resolve this matter.

*N.V. Sathyanarayana* *Managing Director* *Informatics (India) Ltd, * *Bangalore. India. * *www.informindia.co.in http://www.informindia.co.in*

On 23 May 2014 17:31, madhuresh.singhal wrote:

...

Dear Jasim,

As per Indian Tax Law, every foreign payment related to subscribed online resources (Database/Journals) should be done after deducting Withholding Tax (WHT), also known as TDS (Tax Deducted at Source). This tax amount depends on various parameters like whether foreign vendor is giving Permanent Establishment Declaration (a certificate mentioning they don't have any PE in India), TRC (Tax Residency Certificate of resident country) and PAN in India. Also however it is fixed as per IT Law (25% currently), one can take benefit of Double Taxation Avoidance Agreement (DTAA) between India and foreign country. DTAA generally prescribes tax rates like 10% or 15 % and we have the option of taking beneficial position between these 2. So using DTAA provision, we can deduct 15% TDS for countries like USA, UK.

But I am surprised that JSTOR has given you a credit of 15% amount. It looks like they expected that you will deduct 15% tax and accordingly they would have inflated the invoice value to factor this 15%. But when you have not deducted this tax, they would have passed this back to you in the form of credit note. I think you should appreciate JSTOR for this.

I believe, we librarians are still not aware about Tax issues and we are dealing with various publishers without considering the tax implications. In India, tax laws are having retrospective effect, so if you have not deducted TDS any particular year, if caught, you may have to pay for all previous years with penalty. I am not playing devil's advocate here but we should know such regulatory provisions and accordingly deal with publishers. Actually some publishers have acknowledged this and they agreed to deduct TDS.

Regarding Indian Tax Board, they would have meant Indian Tax authorities, where you have to remit the deducted tax.

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 jasim s Sent: Thursday, May 22, 2014 10:42 PM To: lis-forum@ncsi.iisc.ernet.in Subject: [LIS-Forum] Indian tax board-what it is

Dear Friends My colleague received a mail from JSTOR which is reproduced here.Kindly go through it and give a clarification/explain what this "indian tax board".Let me know whether 15% of payment has to without while making payment for subscribing e-resources? mail from JSTOR representative is here...

"Thank you for remitting payment for renewal access to JSTOR journal content. We greatly appreciate your continued support and are delighted that you will continue to provide access to high quality content to your students, faculty, and researchers through the JSTOR platform.

I am contacting you because we noticed that you have a credit on your account in the amount of $140.30 USD. You can use this credit toward new content such as additional journal packages, e-books or current issues.

We would also like to learn more about how this credit may have occurred. We assume that institutions in India must withhold 15% their payments for electronic resources to be remitted to the Indian Tax Board. It appears your institution did not withhold this amount. Is your institution tax exempt or is there some other reason the amount was not withheld?

I look forward to your feedback so that we might better serve you and other institutions in India. Also let me know if I can provide you with more information on additional content that may be of interest to you"

Jasimudeen s Kerala www.jasim.in

-- This message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean.

*Union Budget 2014-15 and Libraries* This is in response to Dr. Goudar's mail. The new Government’s first budget presented last week in the Parliament appears to be less favourable to libraries than the previous Government’s budgets. This comes as a strange surprise from a Government whose party has declared E-Libraries as one its development priorities in its manifesto. Its effect: regulatory bottlenecks for the development of e-libraries continue further intensified. There will be two types of taxes applicable for online content and its subscription/licensing/purchase unless the situation changes between now and the time the budget is passed by the Parliament. *1. **TDS or WITHHOLDING TAX* Applicability of TDS for e-books/e-journals continues to be unclear. As online accessible electronic data they will come under the purview of TDS deduction. TDS is deductible by the payer (library or the agent depending on who is paying the publisher). It is deductible at only one of the points and not at multiple points. If Library uses an agent to pay to publisher and if the agent has already deducted TDS and provides the certificate to the Library, the library need not deduct TDS. Applicable deduction is 10% if the payment is made to Indian publishers/agents. In case of payment to foreign publishers, the applicable rate depends on and varies by two factors: (a) Country of the Publisher; (b) whether or not the publisher has registered with Indian tax authorities and obtained PAN. The deduction process on payment for international transaction is a complex process and puts off all small and medium publishers who may refuse to do business with India. *2. **SERVICE TAX* Service tax is applicable for online content, both delivered by domestic service providers and international service providers. In 2012-13 budget educational institutions were exempted from service tax for services listed in the negative list under Auxiliary Educational Services. The list included an exempted item called -- *services relating to imparting any skill, knowledge, education or development of course content or any other knowledge–enhancement activity. * There was a provision by interpretation that e-books/e-journals could be treated under *knowledge–enhancement activity *for exemption purpose. The current budget has withdrawn Auxiliary Educational Services from the negative list. This is a clear indication that suppliers will have to levy service tax for e-content. The payment provision for service tax is different for online services provided by Indian publihsers and those provided by foreign publishers *(a) **Domestic Online Publishers/service providers*. The publisher is liable to levy and collect the service tax and pay to the Government. *(b) **International Online Publishers/service providers. *In case of import of online information services from the service providers abroad, the liability for declaring and paying service tax is shifted to the recipient of the service (and not the provider/publisher of the service). This means, the library receiving online information services from a foreign publisher will have to declare and pay to the Indian Government the applicable service tax, whether it subscribes to the service directly from the foreign publisher or through a local agent *IMMEDIATE STEPS TO BE TAKEN BY THE ASSOCIAITONS OF LIBRARIES AND PUBLISHERS* The budget session is on. Before the budget is passed by the Parliament the respective Associations of Libraries and Publishers will have to make quick and forceful representations to the Finance and HRD Ministers drawing their attention to these retrograde steps which will hurt the speed of development of e-Libraries in the country, particularly in the higher education and research segment if the libraries are not exempted from these two tax provisions. Hope all the concerned associations – ILA, IASLIC, SIS, Federation of Indian Publishers, etc. will wake up and move fast in making representations, either jointly or severally. Also, Librarians should talk to their internal auditors and finance officers to get a better idea of the applicability of these two taxes and availability of exemptions, if any. N. V. SATHYANARAYANA CMD, Informatics India Ltd Bangalore www.informaticsglobal.com *Note: * The view expressed by me in this mail is personal and limited by my understanding. Readers are advised to consult to experts in taxation area. *Sathya* *N.V. Sathya Narayana* *Informatics (India) Ltd, Bangalore. India. * *www.informindia.co.in http://www.informindia.co.in* On 14 July 2014 15:48, Ishwar Goudar wrote:

Dear Professionals,

If we look at the presentation of the budget by FM few days back, it looks that we have missed the bus again. The service tax covers both domestic and foreign information products, be it journal or bibliographic database. There is no change in TDS. This means we should be prepared spend at least 25% extra as many of the publishers add these components on to customers, although there is a provision to get it reimbursed using the provisions under DTAA. However majority of the small and medium publishers would not like to take PAN and follow the procedure. Ultimately the Libraries suffer and there by our scientific and academic community. In fact we had organised one day Seminar on this topic at NIMHANS and had invited tax consultants and concerned lawyers as invited speakers.Even today many of us, LIS Professionals have not understood the issue properly. We have not done lobbying with our political system. I don't know why authorities at universities, national laboratories and other academic and research establishments are keeping quiet. Why our Library Associations both at National and state level are not doing anything in this matter? Our Information Umbrella for Universities, the INFLIBNET itself has been issued TDS recovery notice. I this is high time for all professionals, LIS Associations to fight the case appropriately at national level, apart from educating our bosses locally.

In the mean time can I request somebody who has made a thorough study of the recent budgetary provisions in this matter to initiate a meaningful discussion with appropriate guidance, so that all those concerned will take the necessary steps, leading for at least a discussion in the Parliament thoroughly so as to get appropriate relief.

Regards,

- - - - - - - - - - - - - - - - - - Dr. I.R.N. Goudar - Visiting Professor Cum Library Adviser Bangalore University Library, Gnana Bharathi Campus BANGALORE - 560056, India - Ex. Visiting Professor Cum Library Adviser, UoM, Mysore - Ex. Scientist 'G' and Head, ICAST, NAL, Bangalore - Ex. Dy Librarian, IITM, Chennai - Ex. Scientist (Information), IICT, Hyderabad - Fulbright Scholar, Univ. of Michigan and Columbia Univ, USA (1995-96) - British Council Scholar (1982-83) E-mail: goudarishwar@gmail.com Tel: 080-23215510 Mob: 91+9611165781 (If not reachable pl try land line)

On Mon, Jul 7, 2014 at 9:44 AM, Swati Bhattacharyya . wrote:

...

I congratulate Dr. Arora for taking such a decisive step.

Can I urge all professional associations to make similar appeal to the Ministry? I am not sure to which Ministry the appeal should go. I feel it should be both to MHRD and Ministry of Finance who sets the rule.

Best regards,

Swati Bhattacharyya, Ph.D. Librarian Indian Institute of Management Calcutta Joka, Diamond Harbor Road Kolkata - 700104 India Phone: 91-33-2467-8300 (Bus extn: 416; Res extn: 106) Library: http://library.iimcal.ac.in

On Fri, Jul 4, 2014 at 1:14 PM, Sathya wrote:

...

*E-books/E-Journals/Databases – Subscription/Purchase/Licensing - Tax Worries of Libraries/Publishers/Agents*

It is appropriate time to re-visit the reply by Mr Madhuresh responding to a question raised by Mr Jasimudeen of Kerala. What Madhuresh tried to explain is true but the problem is far complex and requires urgent action by Library community and Publishers/Agents Associations. The following developments are important to observe in this context:

1. It is a public knowledge now that last year INFLIBNET was issued TDS recovery notice by the Income Tax Department in Ahmedabad with retrospective effect under the amended law of 2012.

2. As most of you would be aware, Informatics stopped handling orders for e-Journals/e-Books of third-party publishers like Springer, Wiley etc. except for those publishers who were willing to let us comply with the amended tax laws of our country in distributing their e-content. We had to forgo significant part of our e-content distribution business built over several years due to many foreign publishers’ unwillingness to accept the orders without TDS deduction. But, that was OK with us, as our Company has zero tolerance to any violation on matters of statutory compliances.

3. Developments like the above were the result of an amendment to Tax Laws in the 2012-13 central budget. The amendment to section 9 (1)(vi) of Income Tax Act that deals with payment of royalties brought payments for subscription/purchase/licensing of software and databases under deduction of TDS (10-25% depending on the country) while making payment. This is draconian and would cripple any buying of e-content if followed as required by the law. Imagine, if you are paying 200 euro to a small French publisher who doesn't understand our law, you will have to deduct 15% as TDS, pay that to the Indian tax department and issue a certificate to the Publisher along with your payment. The French publisher is expected to claim this deducted money from his Government using your certificate! And to qualify for 15% deduction and re-claim it from his Government, the publisher will have to register with the Tax Department and obtain PAN. Otherwise, the library will have to deduct 25% and the publisher will not be able to claim the deducted amount.

4. We at Informatics tried to educate the market against this bad law, made representations to the Government, requested our big clients, publishers' associations and library associations to lobby strongly with the Government for seeking exemption from this amendment for educational e-content. Unfortunately it was a lone battle.

5. Last year in NIMHANS a group of Librarians arranged a well-attended seminar and debate on this issue more as a public awareness seminar inviting Tax consultants and legal advisors. A few publishers from Delhi also attended.

*FACTS OF THE MATTER:*

6. As per the amended law under Section 9(1)(vi) of Income Tax Act E-books/e-journals, which are like any computer searchable databases attract TDS: (a) When Libraries make payment to vendors; or (b) When Vendors make payment to their Suppliers, whichever may happen earlier. Vendor or his Supplier can claim the deducted amount while filing his tax returns depending on the point of deduction

7. In case of purchases from foreign publishers, the matter is a bit more complex as the deducted amount is a revenue to Indian Government but not a loss the foreign supplier as he could claim it from his Government. The complexities are:

(a) The deduction falls under a treaty called Double Taxation Avoidance Agreement (DTAA) between India and several other countries

(b) While The Indian Government has amended its Tax Laws to bring payment for software/databases under TDS, the corresponding DTAAs are not amended.

8. Because the corresponding provisions of DTAA is not amended foreign publishers/suppliers dispute the applicability of TDS and rightly so. But, Indian Libraries/Agents will be violating the Indian tax laws if they fail to apply TDS and will attract penalization by tax department.

9. Indian Agents involved in supplying foreign published e-books/e-journals are caught in a proverbial devil-and-deep-sea situation. TDS by Indian Libraries will make their business unviable, as their commission margins will be invariably less than TDS amount. They can't accept/place orders if the foreign supplier refuses deduction.

10. For Libraries situation is no different from Agents except that a few big publishers who have PAN registration in India accept deduction, but a large majority of foreign publishers refuse deduction.

*SOLUTION*

A. The new Government appears to have an open mind to review the bad laws of the past that are totally unfriendly to development.

B. The new Government has also recognized e-Libraries as a development priority in its party manifesto.

C. The Budget session will start soon beginning July 10. Before this date, Library Associations and Publishers Associations should jointly or severally submit a strong memorandum to the Finance Minister and HRD Minister requesting for either rolling back the amended law under section 9 (1)(vi) of Income Tax Act or exempting e-book/e-journal purchases from TDS deduction.

INFLIBNET, as we understand, is presenting an appeal to the Government through HRD channels to change this law or exempt libraries from the applicability of this law.

The knowledge community of India interested in building e-Libraries would like to solicit the cooperation of all concerned to resolve this matter.

*N.V. Sathyanarayana* *Managing Director* *Informatics (India) Ltd, * *Bangalore. India. * *www.informindia.co.in http://www.informindia.co.in*

On 23 May 2014 17:31, madhuresh.singhal wrote:

...

Dear Jasim,

As per Indian Tax Law, every foreign payment related to subscribed online resources (Database/Journals) should be done after deducting Withholding Tax (WHT), also known as TDS (Tax Deducted at Source). This tax amount depends on various parameters like whether foreign vendor is giving Permanent Establishment Declaration (a certificate mentioning they don't have any PE in India), TRC (Tax Residency Certificate of resident country) and PAN in India. Also however it is fixed as per IT Law (25% currently), one can take benefit of Double Taxation Avoidance Agreement (DTAA) between India and foreign country. DTAA generally prescribes tax rates like 10% or 15 % and we have the option of taking beneficial position between these 2. So using DTAA provision, we can deduct 15% TDS for countries like USA, UK.

But I am surprised that JSTOR has given you a credit of 15% amount. It looks like they expected that you will deduct 15% tax and accordingly they would have inflated the invoice value to factor this 15%. But when you have not deducted this tax, they would have passed this back to you in the form of credit note. I think you should appreciate JSTOR for this.

I believe, we librarians are still not aware about Tax issues and we are dealing with various publishers without considering the tax implications. In India, tax laws are having retrospective effect, so if you have not deducted TDS any particular year, if caught, you may have to pay for all previous years with penalty. I am not playing devil's advocate here but we should know such regulatory provisions and accordingly deal with publishers. Actually some publishers have acknowledged this and they agreed to deduct TDS.

Regarding Indian Tax Board, they would have meant Indian Tax authorities, where you have to remit the deducted tax.

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 jasim s Sent: Thursday, May 22, 2014 10:42 PM To: lis-forum@ncsi.iisc.ernet.in Subject: [LIS-Forum] Indian tax board-what it is

Dear Friends My colleague received a mail from JSTOR which is reproduced here.Kindly go through it and give a clarification/explain what this "indian tax board".Let me know whether 15% of payment has to without while making payment for subscribing e-resources? mail from JSTOR representative is here...

"Thank you for remitting payment for renewal access to JSTOR journal content. We greatly appreciate your continued support and are delighted that you will continue to provide access to high quality content to your students, faculty, and researchers through the JSTOR platform.

I am contacting you because we noticed that you have a credit on your account in the amount of $140.30 USD. You can use this credit toward new content such as additional journal packages, e-books or current issues.

We would also like to learn more about how this credit may have occurred. We assume that institutions in India must withhold 15% their payments for electronic resources to be remitted to the Indian Tax Board. It appears your institution did not withhold this amount. Is your institution tax exempt or is there some other reason the amount was not withheld?

I look forward to your feedback so that we might better serve you and other institutions in India. Also let me know if I can provide you with more information on additional content that may be of interest to you"

Jasimudeen s Kerala www.jasim.in

-- This message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean.