Service tax applicable to online transactions too

Chennai: Downloading of software, ringtones, music, matrimonial service and travel related services that come under the ambit of e-commerce are subject to service tax. The location of the service provider determines the levy of service tax, says Sanjay Kumar Agarwal, commissioner of service tax, government of India.

 

Speaking at a one-day seminar on “E-Commerce and the Consumer Responsibilities and Rights” here on Saturday, he said online data based retrieval services too fall in the e-commerce realm. “The location of service provider and receiver have to be determined for levying service tax,” he said and added that since July 1, 2012, all services have been made chargeable. 

 

In the case of airlines, the services could be determined from the boarding destination and cover even the food being serviced to customers, Mr Agarwal said.

 

According to R. Ramamurthy, chairman of Cyber Services and Privacy Foundation, sales tax should be levied on all online transactions and government should fix the onus on registered companies to collect and remit the tax. With smart phones becoming a fad, nearly 87 per cent of e-commerce transactions were being done through mobile phones, he said.

 

He suggested that only firms registered under the e-commerce act, carry on business in India. Asserting that e-commerce involved vast subjects, Mr Ramamurthy said the entire classified market in India, for instance, amounted to Rs 2,400 crore.