service tax on digital marketing

Should Digital Marketeers Charge Service Tax from their Clients?

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I am digital marketer from India. Should you charge your clients 15 percent service tax?

Digital Marketeers and SEO companies provide digital marketing services to customers in and outside India. While making an invoice, they become confused on whether they should charge any service tax or not. If yes, how much should it be? You may have noticed hosting and domain companies have started charging you 15 percent more. So, should you charge your clients 15 percent too? The answer to this question is ‘Yes’ and ‘No.’

service tax on digital marketing

Before you get more confused, let me explain. As per the government rule, if you are providing a service to any client outside India, you don’t need to pay any service tax to the government. This will come under export.

Now from Indian clients, should you charge service tax? Charging service tax is not compulsory up to an income of 10 lakh. If the income exceeds 10 lakh, you need to pay service tax to the government. However, it is not compulsory to charge the service tax from your client. If you do not take it from your client, you will have to pay it from your pocket.

How much service tax should you charge from your clients?

15 percent. Last year, the service tax to be charged was 12.36 percent. However, in the Union Budget 2016, Finance Minister increased the service tax from 12.36 to 14 percent. Later, additional 0.5 percent tax was increased as Swach Bharat cess. In November, Government added another 0.5 percent Krishi Kalyan Cess was added. Therefore, the effective service tax to be charged from your client is 15 percent.

This is as per the discussion I had with a CA from Kolkata, Westbengal. If you have any questions, please share with us under comments and we will do our best to get you the information you want. You can consult a local CA from your region for better understanding.

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