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:
-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.