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INDIA: 15% Service Tax Imposed on Online Content Regardless of Service Provider Location

Access to overseas-owned online databases will now be subject to a 15% service tax in India. Under new regulations, the tax will come due based on the location of the user rather than the location of the service provider.

The definition of database here is taken to refer to the provision of wide range of online services, including gaming, advertising, website hosting, cloud services and digital data storage, as well as the supply of any digital content, such as films, music, books, images and online newspapers.

At present, it is unclear just how the Indian government will enforce tax compliance by companies located outside the country. It has, however, indicated that foreign companies may be expected to collect the service tax from Indian consumers for onward remittance to the Indian tax authorities.

Content provided by Picture: HKTDC Research
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