VAT News

India-New digital service tax introduced

In a recent notice, the Indian authorities have confirmed that a new digital service tax will be introduced from 1 December 2016, extremely short notice!

The move follows the change to the place of supply rules within the EU, and the introduction by many non-EU jurisdictions of rules which have made non-established suppliers liable to account for VAT/GST on supplies to local non-business customers.

From 1 December 2016, non-established businesses making supplies of certain services to Indian non-business customers will be required to register for the tax and remit it periodically to the Indian authorities. A threshold of 1m INR will be in place, but this currently equates to around £12,000.

Similarly to the EU rules, the changes apply to digital services with minimal human intervention, and the government notice lists the following:

-Website supply, 

-Web-hosting, 

-Distance maintenance of programmes and equipment

-Supply of software and updating thereof

-Supply of images, text and information and making available of databases

-Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events

-Supply of distance teaching

Any businesses affected by the new tax should act now to put the relevant systems and processes in place.

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