After the surprise ban on Rs 500 and Rs 1000 notes came into force from November 9, there could be one more unexpected development on the way in the form of taxation on online services obtained from outside India. These include, but are not limited to e-books, cloud storage area and music downloaded from servers and providers located outside India.
As per a Times of India report, that quotes official notifications issued by the Central Board of Excise and Customs (CBEC) issued on November 9, the tax would be as high as 15% that would be included with the monthly (according to the cycle) bill. The CBEC has also reportedly amended the 'Place of Provisions of Services Rules' with respect to 'online information and database access or retrieval services' as a result of which the place of offering of the service would come to the fore thereby resulting in the additional tax.
As per the TOI report, the above ruling would come into force beginning December 1, 2016. The new tax would come under the ambit of service tax. This is also seemingly applicable to legal movie downloads from servers located abroad.
Earlier, the place of provision of services by foreign-based online service providers was not considered; as it was considered to be outside of India; and therefore there was no tax levied on such services. Now, with both individuals and companies seemingly having to shell out 15% extra money in order to avail online services from overseas, the domestic providers and operators could stand to gain plentiful.