Online aggregator platforms for various services related to food, hotels, etc. such as Airbnb, Oyo Rooms, FoodPanda, etc. have been sent a notice by the Indian Government, asking them as to whether they are paying service tax or not, reports Economic Times.
Churning out more info on the matter, an official from the service tax department, the letters were sent to confirm if these entities are registered with the department and are paying due service tax. The official also said that the companies have approached the department for further clarification and procedure to deal with this.
This ‘friendlier’ approach to alert the companies is to make them aware of their potential liability, in line with the Centre’s desire for a non-adversarial tax regime.
Among these aggregators, FoodPanda has confirmed that they have received a query from the service tax department. The company’s spokesperson further said:
The authorities have conducted an extensive review of our accounts and have found no irregularities so far. We are registered and duly pay our taxes.
In aggregator model of services, it has been a dispute — ever since these services started — about who is the service provider and who is the service receiver. While there was no specific definition of aggregator or tax liability for such services, Government has now specifically provided that such services shall be liable to Service Tax.
The Indian government included a provision in February Budget and made it mandatory for such entities to register with the department and pay tax. It also applies to entities that don’t have any representative office in the country.
The provision states that:
In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay service tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator.
All services attract tax at the rate of 14 percent, excluding the newly introduced 0.5 percent Swachh Bharat cess, unless it is included in a negative list or specifically exempted by the government.
The service tax revenue in India has risen 26 percent in the first seven months of the current fiscal year, compared to the same period last year.