Dear Sir / Madam,
I have queries related to Taxes for following business model.
Business Model: It is a Private Limited company registered in India which has an online tutoring portal website. This website is an online platform where students and tutors could interact with each other and the website charges 20% commission on the price / earnings of tutors. The students and tutors are from all parts of the world. These are independent tutors and students who register on website to interact with each other. Students can post their homework / assignment / course details on the website to get tutoring help from tutors on website. Tutors will see the requirements posted by student and discuss price for his service with student. Once price is decided by them mutually then student would hire tutor for service. The student would make payment of agreed price on the website and money would come to the company. After tutor delivered the agreed service to student, the website would deduct 20% from the agreed price and send remaining 80% to tutor in tutor's PayPal / Bank Account.
As per my understanding this business would come under Service Tax, TDS on earnings of Indian Tutors and DTAA (Double Taxation Avoidance Agreement) for Non-Indian Tutors. Please let me know if any other tax regulation is also applicable here (except usual income tax).
1). As the revenues of the company comes from the 20% commission it earns on the deals between students and tutors, therefore the company would be paying Service Tax on this 20% income from commissions. Please advice whether I am right or not?
2). As it is a global online platform where Indian tutors are also providing their independent tutoring services, therefore when the company would pay 80% part of Indian tutors' earnings then the Company is required to deduct 10% of paid amount as TDS. Please advice me if I am correct?
3). I have gone through the DTAA documents available on the Income Tax website for the Tutors who are Non-Indian and providing their independent tutoring services from their country, through company's online platform. But I am not able to understand how would this work. What formalities the company should get done from non Indian tutors in order to make their full payment to them without any tax deductions in India? For example, the USA based such kinds of business firms take W-8BEN forms filled by all non USA tutors. Similarly, what form should an Indian company get filled by non Indian tutors.
4). Apart from above relevant tax to this Business Model, please also advice me if there is any more Taxes / tax regulations such business should take care of.
I will be very thankful, if experts on this website could help me on above queries.