If you have an app that for simplicity sake assume that it is sold only to Indian customers for say Rs.100/-
Google will pay Rs.70/- after deducting 30% transaction fee.
Do we get entire Rs.70/- as profit? I’m not sure. Can some experienced people clarify if following is correct:
1. We need to pay Rs.7.50 to Income Tax (25% Withholding Tax on 30% transaction fee paid to Google – since it is a payment to Non-resident entity without PAN in India)
2. We need to pay 12.36% Service Tax on Rs.100/- to Central Govt
3. We need to pay 5% VAT on Rs.112.36 go State Govt
So, we get approx Rs.44.52 in hand with Income Tax still to be paid on our Income.
And also there is a problem of whether to pay 5% as VAT or CST because we don’t know where the customers are located (in my state or other states or overseas).
Is this taxation correct? What’s your view?