service tax (reverse charge)

[Guest]

Dear Sir,

We (company) are planning to buy domain name name from a USA based company situated in USA only for $ 20000 (12 lacs Rs.). This payment will make in foreign currency. Whether this amount liable for Service Tax in India and if yes how much?

What will by the position if we buy this in personal name?

[Rajagopalan Ranganathan]

Dear Mr. Kamal,

You have to pay service tax @ 12.36% on the amount payable by you. Even if you by in personal name, the person who purchase the domain name is liable to pay service tax at the above mentioned rate. If a business entity pays the service tax it is eligible to take credit of the service tax paid.

[Mahir S]

Yes sir, you shall have to pay full service tax, either you buy it in company's name or on personal name, as explained above.

[Guest]

Thanks sir.but dont u think this is a purchase transaction and will be treated as business transaction. And if this is purchase then shoukd not be taxed under service tax.

[Mahir S]

Sir,

You need to be clear about the word "buying" of domain names. This looks like a transaction in intellectual property rights, and the terms of the transaction will determine whether it is liable to service tax in India (as recipient of service) or not.

Further, the word Domain is a very vast word in itself, and needs to be interpreted in different ways for different transactions.

Since above details are not being clearly provided therefore i would like not to comment on the issue.

AI Summary

Reverse charge liability for cross-border domain purchases may require the recipient to pay service tax in India. Cross-border purchases of domain names from foreign suppliers may attract Indian service tax under the reverse charge mechanism, obliging the Indian recipient-company or individual-to pay service tax on the foreign-currency consideration. A business that pays the tax may claim input tax credit. Taxability depends on the contractual characterization of the transaction; transfers involving intellectual property rights or different commercial structures may require separate analysis to determine whether the transaction is a taxable service.