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How much tax to pay in India on revenue recd from Google Store App

February 19, 2014

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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?


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