Service tax on income from Adsense and blogging
In India, almost all income from any source is under the liability of taxes towards government of India. In the same way, our adsense income also comes under two vast categories of taxes i.e. Service Tax & Income Tax. In this article we will discuss only about the service tax on income from adsense and also service tax on income from other internet sources & referrals .
Service Tax is a form of tax which is paid directly to the central government by the services provider. Services tax is payable at every month on the current applicable rate of service tax. In order to pay the service tax to the central government, service provider levied the same tax on the consumer of services.
You can read about Income tax on Adsense income in other section on our website.
Notification N0. 19/2012- Service Tax was issued by government of India on 5th June, 2012. This notification is applicable from 1st July, 2012. After this notification, Indian government had adopted a Negative-list system. In negative list system service tax shall be levied on all the services except those mentioned in the Negative List. Earlier, all services are exempted from the service tax except those mentioned in the act.
Service tax on Income from Advertisement / Adsense
Indian Ministry of finance on 2oth June, 2012 had issued a Service tax Educational Guide. In which, it is clearly mentioned on page no 35 clause no. 4.7.1 that service tax is levied only on sale of space or time for advertisement to be broadcast on radio or television.
Notification also said that NO service tax is applicable on sale of space for advertisement in print media, Sale of space for advertisement in bill boards, Public places (including stadia), buildings, conveyances, cell phones, automated teller machines, internet and Aerial advertising.
As the new service tax regime has specifically stated that Service Tax is not chargeable on the sale of space for advertisements on the Internet, website owners and bloggers are exempted from paying Service Tax in India.
If you have already paid Service Tax on your online income from Google AdSense or/and any other direct ad Sales, you can always claim refund of Service Tax from central government.
Service Tax on Income from Affiliate Programs / Referrals
We had concluded that service tax is exempted on the income from the adsense or from advertisement revenue on your side. However, service tax is applicable on your income if you are earning through Affiliate Programs & Referrals (like Amazon Associates) or similar related services on internet.
Do not worry if you are earning through these types of services. You can claim Small Scale Service Provider exemption if gross income from such services is less than Rs.10 Lakhs. In other words you are not required to pay any service tax if the gross amount of the services provided by you is less than Rs.10 Lakhs.
Moreover, Service Tax is levied on the Gross Amount rather on the net income. Gorss Amount is the total amount you received from the affiliate program / referrals. Net income is calculated after reducing expenses from the Gross Amount received. So following equation will make you understand.
Net Income = [Gross Amount Received – Expenses (Like Hosting Charges, Broadband Connection & other services you used)]