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India 15% Service Tax on foreign e-services

  • Nov 16, 2016 | Richard Asquith

India 15% Service Tax on foreign e-services

India is to impose 15% Service Tax on electronic services sold to Indian consumers by non-resident providers from 1 December 2016.

Currently, only resident providers of such digital service are liable to the consumption tax. The taxable services include: streaming or downloads of music, video and games; e-books; cloud-based software; online advertising; subscription to membership or news sites; and internet-based telephony.

The 15% tax will come into force from 1 December 2016 according the announcement by the Central Board of Excise and Customs. There will be an annual registration threshold of Rs 10Lakh, approximately €15,000. Providers will be required to register with the Indian authorities immediately via a local tax representative. The first monthly Service Tax return will be due by 6 January 2017.

Proving Indian residence

Providers will need to establish if their customers are resident in India by collecting and two of the following pieces of evidence:

  • Indian issued credit card
  • Billing address in India
  • Bank account used for settlement is in India
  • Customer has a Indian postal address
  • Customer's IP address is from India
  • Land line for downloads is Indian coded
  • Customer's SIM card on mobile transactions is Indian-based

GST to replace Service Tax 2017

Service Tax will be replaced by a Goods and Services Tax sometime in 2017. The likely GST comparable rate will be 16%. B2B services provided by non-residents will remain subject to the reverse charge.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.