Issue in question is the improper application of the service tax rule by GoDaddy India. We are being forced to pay 15% extra over and above auction wins. We are yet to check the sales, but it is probably the same in addition to the 20% cut making the total to 35%.
This business has become so nonviable for us that we are moving our money to venues like bitcoins.
The ST rule was present before but was not enforced on companies billing from outside of India. From Dec 1, this became mandatory and GD was quick to make amends. I won an auction during that time and I was charged 15% ST on the renewal component only and not on the auction amount. We quickly realized it is the ST rule in effect and we didn’t find that as a problem.
However, many people started to report from last week that GD is now charging ST on the whole amount (auction amount + renewal). I didn’t know until I went to pay for 2 auctions I won. I was upset to see 300+ dollars extra on what I was supposed to pay. I mailed the support that I cannot pay this and the fact that GD should not be charging 15% on the entire amount. They replied that they think it is correct and I ended up with a ban on my account.
I have talked to many domainers and some tax experts and they have the opinion that ST should not be charged on the auction amount but only on a service fee – a 15% service tax on a smaller service fee component. This is because domains are a product and winning an auction is not a service. I can produce countless examples for this thought being applied in our daily lives.
When we buy bitcoins online from exchanges based in India, we are not being charged 15% ST on the bitcoin price but on a service fee. The service fee is very minimal and hence the ST too is minimal. See below:
When we buy shares online through stock exchanges in India, we are not being charged 15% ST on the entire stock price but on a brokerage fee. The brokerage fee is very minimal and hence the ST too is minimal. See below: (Service Tax is on the brokerage amount only, read the first line in second page).
What difference or justification can GD India give for charging us like this? We would like to hear from you.