Tax Obligations for Selling Digital Goods in India: eBooks, AdSense, and Affiliate Commissions

Selling digital goods like eBooks, earning AdSense revenue, and generating affiliate commissions in India comes with several tax obligations. This article provides a detailed breakdown of the taxes you need to consider, including Goods and Services Tax (GST), Income Tax, and Tax Deducted at Source (TDS).

1. Goods and Services Tax (GST)

Applicability: If your aggregate turnover exceeds INR 20 lakh in a financial year, or INR 10 lakh for special category states, you need to register for GST.

Rate: The standard GST rate on eBooks is 18%. However, the rate for other digital services may vary, so it's important to check the specific classification.

Filing: You must file GST returns periodically, usually monthly or quarterly, depending on your turnover.

2. Income Tax

Nature of Income: Earnings from selling eBooks, AdSense, and affiliate commissions are considered income from business or profession.

Tax Slabs: Your income will be taxed based on the applicable income tax slabs. Make sure to keep track of all your earnings and expenses.

Deductions: You can deduct business expenses related to your digital sales, such as hosting fees, marketing costs, and any other relevant expenses.

3. Tax Deducted at Source (TDS)

AdSense and Affiliate Income: Google and other affiliate platforms may deduct TDS on your earnings. The TDS rate for payments to residents is generally 10%, under Section 194J for professional fees.

Claiming TDS: You can claim the TDS deducted as a credit against your total tax liability when you file your income tax return.

4. Record Keeping

It is crucial to maintain detailed records of all sales, expenses, and any TDS deducted. Accurate record-keeping is essential for accurate tax filing and compliance.

5. Consult a Tax Professional

Given the complexities of taxation and potential changes in laws, it is advisable to consult a tax professional or accountant familiar with digital businesses in India. They can provide personalized guidance based on your specific situation.

Summary

Register for GST if your turnover exceeds the threshold. Pay income tax based on your total income, considering available deductions. Keep track of TDS on AdSense and affiliate commissions. Consider professional advice for compliance and optimization.

By following these guidelines, you can ensure that you meet your tax obligations while selling digital goods in India.