In its latest move Government Of India has now start charge 15 % service tax on all the digital transactions which are taking place between the buyer from taxable territory(India) and the seller who is located in a non taxable territory. For e.g. if you use to purchase website hosting for Rs. 100 per month from some foreign seller, after this service tax you will have to pay Rs. 15 more in the form of service tax to the Indian Government.
Some of the popular websites such as Godaddy and Digital Ocean have already started to charge 15% service tax. Many big companies who offer their services to Indian consumers are expected to start charging this 15% service tax soon. This definitely will be an extra burden on Indian consumers who normally go with foreign web hosting companies because of high quality network and more features at low price.
According to Government Of India they are implementing this move so as to help in increasing the consumption of Indigenous digital services. But they are overlooking one very important factor here especially in the case of web hosting that the Indian Web Hosting companies are light years away from their foreign counterpart because of the ultra expensive bandwidth and extremely old and obsolete hardware. I really don’t think so that this move will help increase their business at all but will definitely increase the burden on Indian consumers.