Main part of the amendment is the change in the definition of ‘place of provision of service’. (Reuters)

When you download music or an e-book from an overseas site, or plan to but some storage, a cloud from an overseas service provider, be careful as starting from December 1, a service tax component of 15 percent be added in your bill.

Domestic suppliers in the country, like movies which can be downloaded in the country, already incur this tax. But in case if the supplier is overseas, the tax is not applied if the recipient is government, local body an individual or government agency based in India. Suppliers from overseas incur service tax only in respect of B2B transactions when the recipient is in India. An exemptionmis available in such transactions if the supply s related to information databases

The Central Board of Excise and Customs (CBEC) in a surprising move, has ended the ‘Place of Provisions of Services Rules’ (PPSR) for ‘online information and database access or retrieval services’, thus impacting your bill, a ‘The Times of India’ report has said.

The main part of the amendment is the change in the definition of ‘place of provision of service’. As of now, if service providers are outside India, the provision of service is also outside the country and no service tax can be paid on services supplied to government, individuals, and government bodies in India.

From next month, place of provision of a service will be the location of the recipient of service. It is therefore that all downloads in India will be subject to service tax, the paper quoted Sunil Gabhawalla, achartered accountant and indirect tax expert as saying. He furthe said that the amendment would impact overseas companies providing various services like advertisements, web subscriptions, cloud hosting, music, e-books and gaming among others.