GST Implication for India
** This is only applicable to India based instructors***
Hi Team,
I couldn't find relevant forum topic, so posting under this.
As per Indian law, Udemy deduct 18% GST from Indian student and rest is shared as per revenue model.
Now as per Indian law, as sell of udemy course comes under eCommerce category and we are suppose to pay GST for all Indian students (not applicable to student from other countries) enrollment (money collected), now there are 2 ways to pay up.
- Pay 18% on you income.
- Show proof that Udemy has already collected and paid that amount to Indian government, so we don't have to pay.
Now second point sounds more logical, as Udemy has already paid tax and I wouldn't want to pay the same tax again from my pocket.
But...
Indian authorities needs proof of tax collected by Udemy (and paid to Indian government), but I dont see that the doc is available directly to us. and I have raised a ticket but I think it will go in longer loop.
So is there anyone who can guide us on how to get the GST document from Udemy?
@Mods this is not tax advisory, this is standard doc which we need from Udemy to show it our tax authorities.
Comments
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Hi, I have already replied regarding this, and there are a lot of other posts related to GST on the forum
" GST is charged on the service, which is Udemy providing the course to the student. You buy any service in India, or any product on Amazon they are all rates inclusive of GST, therefore from total sale price GST is deducted, which Udemy pays to Government of India. The transaction ends here. Government does not care which course by which instructor was sold, they want 18% of total sales, thats it.
The second thing is the relationship between instructor and Udemy, the relationship is that Instructor has licensed his/her intellectual property and he is getting monthly royalty for it. Royalty, license fee does not come under GST. Royalty is income which is why it is liable for Income Tax in India if you cross the income bracket.
If a company is in India, they deduct TDS, Tax Deducted at Source and deposit to Indian Income Tax Department but as Udemy is in USA, they deduct tax (withholding tax) there and deposit with American government. Now they give you a form which you can show here saying my tax was deducted in America and the Indian government gives you credit for it to avoid double taxation.
I hope the relationships are clear as well as the difference between GST and Income tax. "I hope this clears your questions, you do not need any document related to GST from Udemy.
Link to earlier post - https://community.udemy.com/t5/Course-Management/Udemy-started-deducting-18-GST-for-indian-enrollments/m-p/87535/highlight/true#M12903
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Thanks Salil for your time and reply. I actually searched for GST related query but couldn't find.
So as per your argument, we don/t need GST registration even if we cross 25 lakh income in future as well, right?
Now coming back to last part, where you said if company is registered in India they collect TDS but as Udemy is from US, it withhold in similar way in USA and we can claim exemption.
Now here is the twist, my 26AS shows TDS in INR value from Udemy Inc ( I assume it refers to Udemy India, because why would there be Udemy USA TDS in INR), can you through some light on this.
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Before few days same thing happened when I saw 26AS traces. I had doubts as 26AS traces was showing TDS from Udemy. So I dropped mail with 26AS traces and this is what Udemy support team replied. May be this can help you.Check highlighted lines.
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Thanks for the reply. So this is Udemy India or Udemy US which is holding this tax? and whatever it is, doesn't matter, right? or does it matter? My CA was saying, if Udemy India is involved then we may have to look for GST implications, non-India sell doest comes under GST.
And I see that you have channel similar to ours( in terms of students, we have another channel with 3 courses).
How are you doing your tax with all these? We can simply show this income like normal tax? no GST number needed, right? and as Salil suggested we shouldn't care about what GST is, as it is collected by Udemy.
Please help with your guidance, my CA is not exactly expert in this domain hence.
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I showed as business income. In that you can claim expenses that you did like buying a laptop, mic or anything related to your course creation. Better is check with your CA.
Whatever TDS Udemy submitted to Indian government that much you need to pay less while filing ITR.
I think we don't need GST for Udemy income. Yes if we sell on our own site then we might need GST.
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@LearnAnywhe151
Firstly, let's clear the GST issue, think of it any way you like, let's say you call yourself employee of Udemy, do you pay GST on salary? NoNow as you do not have employment agreement you are not an employee, but you have in principle licensed your intellectual property for which you get 37% royalty / license fee which is again not liable for GST.
Now let's say you want to say you sold your intellectual property and issue GST invoice, even in that case exports of any goods or services is considered as zero-rated supply thus attracting 0% GST, so sure just to show your turnover you can raise 0% invoices and file returns but you will not be paying any GST.
For the TDS aspect, let me recheck my 26AS and get back to you.
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Hi @LearnAnywhe151
,Thanks for the question. The answer to this requires an intervention of a fully qualified Chartered Accountant who is well-versed with foreign income and Indian taxes. I will share my journey in a few quick bullets:
- I hired a good CA after crossing an annual turnover of INR 20 lakhs from Udemy. We registered for GST.
- I also showed him all the financial reports I receive from Udemy and told him this is what I get, nothing more.
- Initially, the CA faced a few challenges and hick-ups and I paid about 3-4 lakhs per quarter as GST (for atleast two consecutive quarters)
- But beyond that initial hick-up, he is now well-versed and I have started saving money. I don't remember paying huge GST charges for the past one year or so
My CA now does his job well. He is renowned locally and runs a small-to-mid size firm. He doesn't have much time on his calendar, neither do I. So I just do the job of sending him my documents monthly. And he does his magic. I really don't get into the nitty-grittys.
In my humble opinion, it is always advisable to hire a good CA who can take you through this journey. Just share with him whatever you have and inform him this is what we get, nothing beyond. If he is good, he will save you money. If he is not aware of foreign income and taxes, he will ask for multiple documents and continue asking questions. The loop is never ending. This is an indicator that he doesn't know much. So, you should find another.
Sorry, I could not help much beyond giving this honest advice.
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Thanks Rahul for your reply.
This really helps.
If you don't mind, Can you PM me his mobile number (maybe after checking with him)? As he is busy and I assume not in Mumbai ( my location) I will have my CA talk to him and we will pay for the consultation fee. So he doesn't have to spare much time and we get the help needed as well and we will pay for his time and expertise, so it is a win-win for all of us.
If you cant share that then I have few question.
- In India, ecommerce comes under GST ambit from rupee 1 ( I am talking about revenue from our Indian students), so did he pay GST for your past revenue as well? (with penalty)?
- Does he still pay GST? the thing is Udemy is already collecting GST on our behalf so it doesn't make sense to pay GST again. Hence asking. we will paying double the tax amount.
The problem with good CAs is , it is hard to find particular expertise, for example my cousin in CA for 25 years and expert in his field but even he didn't know much about this case, my current CA is my sister and she is again expert in her field (10 years) but not much in this case. I asked for your CA details so I don't have to again search for good CA and eventually find that he doesn't know about it much anyways, or end up giving me wrong advise. For example, you found a good CA and still he had issues initially but now he knows the drill and can help anyone with his expertise.
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Hi Salil,
Thanks for the reply.
We can say we sold our IP and getting royalty in case of platforms like skillshare, because in Udemy we can set the price, sell course with our coupon code etc. ? What do you think?
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Thanks for the reply.
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Hi @LearnAnywhe151
,Oops, I did not know your CA was one of your close relative. I will definitely try to see if I can have him speak to your CA. I am not so sure at this point .He is professionally a CA (leading a reputable CA firm), but he also chairs a number of municipal committees and legal councils including the Chambers of Commerce in Pune. Plus, he is always flooded with rich and famous visitors in our vicinity. I have a few other (non-commercial) discussions that I still have to close with him and still waiting for this part of the year to go by, so I could catch up. But I will definitely put in a word as I get to catch up with him.
I will take a shot at answering your questions based on my experience:
- In India, ecommerce comes under GST ambit from rupee 1 ( I am talking about revenue from our Indian students), so did he pay GST for your past revenue as well? (with penalty)?
I am on Udemy for a long time (since 2016). GST was implemented in July 2017. I did not create a GST ID until I crossed the minimal threshold requirements. No GST ID means no GST paid.
- Does he still pay GST? the thing is Udemy is already collecting GST on our behalf so it doesn't make sense to pay GST again. Hence asking. we will paying double the tax amount.
The last time I had paid GST was in July 2020. After that, the CA did not request for any payment. I do not remember the exact reason he had quoted. But this may possibly be due to some relaxation during Covid OR it could be because they are now showing that GST is collected by Udemy using the revenue reports I send them. I need to confirm this.
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***Additional Info***
I had sent him this link to refer when he was struggling in the initial days. You may have seen this already. If not, this may be very helpful:
https://www.taxfull.com/12949/gst-on-international-services
Technically, we should not be paying GST at all as we receive payments in foreign currency. I asked him to apply for LUT bonds and claim no charges.
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What I came to know is that we do not need to worry about GST as this is royalty income. Udemy takes GST from Indian students and submits to Indian Government. After deduction GST Udemy does revenue sharing i.e 37% to instructor. Also it's not us who are giving invoices to students.
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Thanks for the info, whenever you get the go ahead , do share his number on my PM, or even his assistant will do, if s/he can guide.
Will checkout the link shared.
Frankly speaking, I see lot of confusion in community and it will be better if someone from Udemy India finance can write a detailed blog on tax implication for Indian instructors. I hope someone from that team reads this thread.
Appreciate reply from everyone here, Salil, Alpha and Rahul.
Cheers!
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I suggest that, the Udemy Inc, should carefully look at the India Udemy's reports about financial aspect; iam of the opinions that Udemy should license Indian Udemies so that, any course sold should be with receipt, to avoid over taxation!1
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Hi @LearnAnywhe151,
Thank you for your feedback! Having a formal withholding and reporting for Indian instructors is something that our team have discussed for a while. I have shared this thread with them for consideration. Thank you for advocating and for your active participation in this topic!
Bella Almeida
Udemy Community
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Thanks Bella for taking note of this.
As you can see there is lot of confusion between instructors and also amongst the CA ( which are hired by instructors), it would be of great help if we can have clarity on tax implications. You can send below points to your India tax team.
Let me summarize it for you:
- Do Indian Instructor have any tax liability as far as GST deduction for Indian students is concern? If yes then Udemy should provide their GST number and break up of GST collected from India.
- If GST is not applicable for Indian Instructor then can we consider this as royalty we are getting from Udemy? but if that is the case then next question is more important. Why there is TDS from Udemy India.
- Regrading TDS deduction for Indian instructor ( which shows up in 26AS form, provided by Indian authority), it shows that Udemy is deducting the amount under Section 1940, which is Ecommerce section and tax is 18% from rupee 1, so we would need clarity on that.
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Perfect, @LearnAnywhe151, thank you very much for taking the time to provide more details about some of the grey areas in regards to tax implications. I've passed your comments to our Tax team so they can take them into consideration.
In the meantime, I'd recommend sending these questions to our Instructor Support team - they will be more than happy to help answer them.
Bella Almeida
Udemy Community
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Thanks Bella, I have raised the request, Looking forward to the response. We hope that you also get some response. Keep us posted.
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For the update, As per 26AS under ecommerce section, Udemy is deducting 1% TDS for the whole amount which they are crediting to our account (not just the amount collected from Indian students), also for the amount they are showing conversion rate of around 75 but our payment getaway doesn't give us the same amount and give lower conversion , so TDS deducted is on higher amount.
Example : if you earn $1000 for a month, then your payment gateway may give you INR 71-72k but udemy shows 75k in 26AS and deduct INR750.
Right now it just appears for 3 months in my 26AS for this year, as they haven't updated for rest of the months yet.
I think our tax will come under scrutiny if Udemy India team doesn't provide clarification. We could have clearly considered everything under export of service and got rid of tax complications but 26AS suggest otherwise and making thing more complex. and not to mention that they just split out template replies on support and has same answer to every query, consult your tax consultant, which doesnt help.
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For the update, didnt get anything other than template replies from Udemy.
My CA just sent me the 26AS doc and it shows 1% TDS deducted and submitted to Indian IT department for my total income, so they are submitting TDS even when we sell courses to non-indian students. We are not sure, where it leave is with tax submission point of view.
cc @Alfa-eLearning
@Rahul Iyer
@Salil Dhawan
Did you guys file the taxes for last FY (21-22) , any issues?0 -
Hi!Any co-instructor here? I wish to know that if I add co-instructors in my courses to assist me, would Udemy deduct separate withholding and deposit TDS (Indian tax) for each co-instructor while doing payments, or it would deduct the whole withholding and deposit TDS under my name only and then distribute the shares to the co-instructors?0
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Hi,
I'm CA Abhishek Jain, As far as I understood Udemy model after studying one of my clients file.. My understanding about Indian instructors is as follow.
1) Udemy is a US based Company and obey US tax laws.
2) Instructors (in this case - indian instructor) upload his/her course on Udemy portal and set the price. [Inclusive of TAX -(This tax is US tax & not Indian tax)]
3) Udemy manage to sell your courses to students all over the world and collect course charges suppose INR 500 (inclusive of tax eg. 75)
4) Out of balance 500-75, i.e. INR 425 (INR 75 Is a US GST/Sales tax also called as a indirect tax) Udemy gives you royalty in a particular % of balance amount say 37%.
5) So your revenue point is this... I.e. when you earn 37% and not when Udemy sale course to students.
6) So taxes applicable to you will start from this point. Taxes means GST, TDS and then Income Tax.
7) Udemy is US company so it collect US GST/sales tax from students to whome it sales course and pay to US govt. This tax has nothing to do with indian govt revenue.
Now it will give you 37% of income and will again deduct TDS as per applicable rates in US (for US Govt - also called as a Direct Tax) for this Udemy will provide you form 1042-S containing details of your income and tds deducted by them. 9) Now Udemy will remit this remaining income to your indian account and deduct indian TDS @ 1% and treat this income as a royalty payment to you.
10) so when Udemy will determine your 37% income, you should to book it as a your turnover and check if indian GST provisions (like registration, gst filings etc) are applicable to you or not and take necessary action accordingly.
12) further based on your turnover or income, more provisions like maintaining proper books of accounts, tax audit and filing of different tax forms will be applicable to you.
13) There is a large scope of tax planning. You should consult your CA or tax planning adviser before taking any decision or filing any returns. You can even claim all the tax deducted by Udemy as tax refund or adjust it from your total tax payable at the end of the year.
Thanks & Regards
CA Abhishek Jain
caabhisheksjain@gmail.com
@LearnAnywhe151
@drkrisharma
@Alfa-eLearning0 -
Thanks.
Quoting you.
7) Udemy is US company so it collect US GST/sales tax from students to whome it sales course and pay to US govt. This tax has nothing to do with indian govt revenue.
- Are you saying that Udemy collects 18% tax from Indian students and doesn't pay to Indian IT department?
9) Now Udemy will remit this remaining income to your indian account and deduct indian TDS @ 1% and treat this income as a royalty payment to you.
- Why it appears under 1940 ? which is ecommerce section? and tax implication are from first rupee earned.
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1) Are you saying that Udemy collects 18% tax from Indian students and doesn't pay to Indian IT department?
- No. Why Udemy collect GST on behalf of Indians? Udemy is a US based company, Udemy is not responsible for compliance w.r.t. indian gst is concerned. The case you mentioned are known as import of service by indian student from Udemy (US). Generally, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability casts on the recipient under the reverse charge mechanism. However students being unregistered person and a end consumer, not liable for GST.
Consider it this way, suppose you sold service outside india eg. From Fiverr or other websites, do you pay taxes applicable to that other country? No, you just paid taxes applicable to you in your country. Same thing apply to Udemy. It will comply to tax provisions applicable to there country only. And from your income you have to comply to the provisions of your country only w.r.t. indirect tax is concerned.
9) Now Udemy will remit this remaining income to your indian account and deduct indian TDS @ 1% and treat this income as a royalty payment to you.
- Why it appears under 1940 ? which is ecommerce section? and tax implication are from first rupee earned.
Yes.. becouse Udemy is a e-commerce operator and you being a instructors are their participants. As per sec. 194O, E-Commerce operators should deduct TDS @1% at the time of credit of the amount of sale of goods, services, or both to the account of an e-commerce participant or at the time of making payment to an e-Commerce participant by any other mode, whichever is earlier, and hence Udemy is bound to deduct TDS @1% on the amount it credit to your account.
Hope this will clear all your doubts
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"- No. Why Udemy collect GST on behalf of Indians? Udemy is a US based company, Udemy is not responsible for compliance w.r.t. indian gst is concerned." -
Why they are not responsible ? Check below screenshot where Indian student purchased course and 18% tax deducted. Isn't it GST ?
Not just India, I can see this kind of tax deductions for students from other countries as well. For Ex-
Below one is Mexico where it is 16% tax.
Below one is from UK where it is 20% tax.
If they are following just US tax then the tax rate should be same for all these purchases but that's not case here.
With Udemy we are NOT collecting money directly from buyers(students) and we are NOT issuing any invoice. Now let's say if I sell my courses directly to Indian students using my own website then I think I have to deduct & submit 18% GST to Indian government.
"Consider it this way, suppose you sold service outside india eg. From Fiverr or other websites, do you pay taxes applicable to that other country? No, you just paid taxes applicable to you in your country." -
With Udemy we pay US withholding tax for all purchases from US students @ 15% rate. Same Youtube does for the earnings from US. Also Fiverr & Freelancing websites etc are NOT royalty income but here on Udemy it is royalty income.
@Bella
Can you pls help in confirming if Udemy deducts 18% GST for Indian Students ?1 -
Thanks for the reply but I think you are mistaken.
Adding to Alpha's comment.
This is what Indian student gets in invoice, it clearly says the course is sold by India llp and not US based.
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1) As per my understanding, Udemy is not registered in India under GST, (As I am not able to see it's GSTR number on tax invoice shared by you for indian invoice, which is compulsory to show as per GST act on every invoice one share), also you can check the same by searching 'gst number search by name'. If Udemy is not registered under gst, question of gst collection doesn't arise. Also you can read RCM rules on import and export of services for better understanding.
Further (just for example) considering Udemy do collect GST from students, so what it's tax on the income of Udemy not yours. Udemy gives you 37% of whatever be the %, for the course uploaded by you after indirect taxes. Udemy does its part w.r.t. sale tax /gst is concerned. It has nothing to do with your tax compliance. You providing service to Udemy by uploading courses on their platform you are responsible for gst registration and return filing, Udemy Sales your service to end consumer, Udemy doing its part by collecting taxes from students. What is the issue? For your service you will receive specific % of revenue from Udemy and for Udemy it will receive 100% income from student.
2) US withholding tax is different, we call it as direct tax and TDS. Udemy deducting it for its home country I.e. US. and will give you tax credit form so that you can claim it in your country as per applicable DTAA between India and US and it's deducted directly from your specific persentage of income.
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To LearnAnywhe151 @LearnAnywhe151
If Udemy india selling course to indian students, it will collect gst as now it will not amount to export/import of service. It's between India to India. For this as well, its udemys tax, nothing to do with yours. It's service from Udemy to students, on your service from you to Udemy, gst provisions will apply to you. Trail will be read as follows
1) You - (Export of service to) Udemy US
2) Udemy US do inter branch transfer of service to its fully owned subsidiary / branch at India
3) Udemy india will sell service to indian students.
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@CA_Abhishek
As an instructor we have limited info with respect to particular purchase so I just provided that screenshot but @LearnAnywhe151
provided what indian student gets on purchase.Udemy sells to indian students and deducts GST. After that Udemy pays 37% to instructor as royalty. This 37% we instructors get as royalty NOT for selling anything to Udemy and Udemy already sold course(s) to students and did GST part. So how can GST comes into picture for this 37% instructor share ? I think it should be only income tax on this 37% money received on instructor end.
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