Are you paying Service Tax on Adsense Income?

RaviC

I think this is one of the most frequently asked question but answers are not very clear.Many say consult a CA but not many CAs know abt Google Adsense (GA) program in India, making it tougher to get some guidance.So thought of asking here as people from various varied interests congregate here .

My question is - 'I earn more than 10lacs /annum through GA.Should I pay service tax (ST)?

If yes, again a problem comes up - there is no facility to send an invoice to Google specifying the ST amount.In such a case, what to do?Should I (website owner/publisher) pay the service tax of 10.3% from the amount that i receive?

nkr102

1. If you are getting this money in INR from Google, then you have to pay the service tax

2. If you get this amount in USD/ any other Forex, then there is a way to avoid service tax

Exports are currently exempted from service tax, so option2 helps there. Service tax is collector's responsibility. Whether you have charged to your client or not is not important. If you are in service tax bracket, then you have to pay this on your revenues.

For more details you can also checkout details @ http://eLagaan.com/kb

Thanks

Navin

eLagaan

RaviC

The problem is website publishers cannot send invoice to Google (specifying the service tax) & by the way Google pays in INR cheques only

So Navin, you mean to say - that whether I send an invoice to paying authority or not (in my case Google pays me), If im under ST ambit, i must pay ST if the company doesnt pay.

nkr102

Yes thats true. It is possible to change the Google Adsense account to send you Dollar cheques. There will be a long delay in payment of the cheques (it takes about 1 month for a dollar cheque deposited in Indian banks to get cleared) and also some expense about Rs.500-Rs.2000 per cheque. But i guess, this cost shall be much lower than service tax liability.

Thanks

Navin

eLagaan

UmangM

Hello,
The way i see it. We do not need to pay service tax as;
- We get a commission i.e 68% of the total advertising sold via Google (Adwords)
- Google Adwords already collects service tax
So for the advertising space sold on a site say for Rs. 100, google already collected service tax from advertiser when he bought it (from the adwords). Now google keeps Rs. 32 (its cut/charge for selling my advertising) and sends me my cut/part/commission i.e Rs.68. And since service tax has been already collected on the whole Rs.100 from the advertiser by google so i don't think that we need to pay it again as we are only getting a part in some sort of commission on the total advertising sold.

Just my thought. I am not in legal profession or have a law degree.

mayank

Hi Ravi,

Just like to clear some things regarding adsense (finance part)

1. You are not liable to pay service tax on income earned through adsense. The principle behind this is correctly stated by Umang.

2. Income to be booked on accrual basis and to be shown under the head business income.

3. However income earned directly through your own website is under the ambit of service tax.

I am a CA myself and advising the same thing to my clients as well.

Mayank

RaviC

Mayank & Umang, Thanks for yur comments.

Welcome to Pluggd.in Forum!

Categories

Recent Activity

Top Posters