Service Tax on Freelancer websites like freelancer.com

[Mudit Jain]

If websites like freelancer.com are providing freelance work to Indian freelancers by Indian businesses. They are collecting payment on behalf of freelancer from the client and acting as a safety net. Do they have to pay taxes on the whole project money collected?

Let me take an example - Indian Company ABC hires Freelancer Mr X via freelancer-india.com for ₹ 100,000. 20% is their commission. Then do they have to pay service tax on 20,000 or the whole amount 100,000 ?

[Rajagopalan Ranganathan]

Sir,

Service tax is payable on ₹ 20.000/- which is the commission earned.

[Ganeshan Kalyani]

For 80 thousand they are pure agent .

AI Summary

Service tax liability applies to platform commissions while platform receipts acting as pure agent are not taxed. Only the commission retained by an online freelance marketplace constitutes its taxable service value for service tax; amounts collected from clients that are received and forwarded to freelancers when the platform acts as a pure agent are not included in the platform's taxable value.