Help to start with themeforest for Indian

Envato Authors Theme Authors
1

I have some legal and taxation related questions.

A1. As an author here on themeforest, Am I a service provider ? [Yes / No]
A2. And so I need to pay service tax to indian govt. Am I true? [Yes/No]

B. As an author here on themeforest, Am I a product seller ? [Yes / No]
A2. Ans so I need to pay VAT to my state govt. and CST to indian govt. Am I true? [Yes/No]

I meet local CA, they can’t clear on here item selling is a ‘SALE’ or ‘EXPORT OF SERVICE’ thru themeforest author T&C and regular and extended licenses.

CASE 1:
They gave me the Supreme Court judgment Apex Court in Bharat Sanchar Nigam Ltd., v. Union of India and others ( http://indiankanoon.org/doc/597256/) link.

So, if the right to use is actually passed on to the buyer => then VAT
if right to use is not passed on => then Service Tax.

As a result they said ‘The Dominant intention here is that your item is for 1 client , and therefore is like a Deemed Sales’. and I need to pay VAT to my state govt. and CST to indian govt.

CASE 2: Supreme Court ISODA case and (http://taxguru.in/service-tax/service-tax-vat-jargon-softwares-software-licensing-simplified.html)

they said:
FURTHER, SINCE WHAT IS SALES AS PER ENVATO IS QUESTIONABLE , YOU CAN OPT TO MAINTAIN BOOKS & OTHER COMPLIANCE’S AS PER SERVICE TAX REQUIREMENTS. IT IS MENTIONED IN THE ENVATO PDF THAT THE BUYER OF YOUR THEMES CAN NOT REPRODUCE THE THEME FOR SOMEONE ELSE, SO WE CAN TAKE THAT STATEMENT TO SHOW THE DOMINANT INTENT OF THE TRANSACTION AS A SERVICE ,( I.E LIKE I EXPLAINED , THE EULA <- AS PER I.S.O.D.A CASE )

As a result they said ‘YOU CAN OPT TO MAINTAIN BOOKS & OTHER COMPLIANCE’S AS PER SERVICE TAX REQUIREMENTS’.

===

I am confused, please guide me answer the above questions as an Indian Author.

regards,

1 Like
2

Hire an accountant for your legal and taxation needs. They will assist you better. They know how to deal with this.

3

I hire two CA for legal and taxation. One is stick to CASE 1 and second one is stick to CASE 2. And so I am confused.

4

We are also confusing on taxation in India, the expert advice need here.

5

We are not a service provider here. So, no service tax.

We are selling products and according to my accountant, we are not responsible for paying VAT and CST as Envato hosts our digital files outside India. Means, they have servers outside India.

6

Do we need to pay income tax only ?

7

Yes, income tax and professional tax.

Service tax is applicable once your financial year income crosses 10 lacs. And, it has to be charged 14% extra on your service fees if you are providing freelance service to your clients like theme installation, web design etc.

8

Have you a link for the doc ?

9

No, this was told to us by our accountant.

10

Thanks you. I will discuss with my CA.

11

Hi, crelegant

My accountant told:
Okay, I will find the proper Case Law judgement for you, after some time !

Also, In case you need to communicate the answer to those authors, tell them that There is No Service Tax liability in case of Export of Services. So such services are Not included in the 10 Lakh limit.

please reply.

12

Hi,
You are required to pay regular tax only. Service tax is only applicable if you providing services in India which we don’t do, if you do thats different case. Since you dont directly sell anything no need pay Sales because in India there are no clear rules. Though you will need to register under service tax.
I have been filling taxes for 5 years never had any issues and turnovers were high.
File advance taxes properly , register under service tax and pay service tax for the services you use from foreign services(Basecamp etc) and you are good to go :wink: .
Hope this helps
Abhin

13

@uckhandla yeah… its really confusing…

But after searching for an year and talking to other authors and CA’s,

I found that only income tax need to be paid : 10% if less than 5 lakhs, 20% between 5 -10 L and 30% above that.

The Tax should in the name of : Income from Business and Profession (Also see section 44D)
You can also deduct your expenses before calculating income.

Forget about VAT, CST, Export, Service etc…

Hope that helps

~Surjith

14

Thanks @surjithctly and @Artillegence.

15

All good then. Very helpful. Thanks for creating topic.