Digital Product Sales Tax: Courses, eBooks, Templates, Notion Templates
Complete guide to taxation of digital products covering online courses (Teachable, Gumroad, Udemy), eBooks (Amazon KDP), templates (Notion, Figma, Canva), stock assets, platform-wise GST treatment, income classification, Section 44ADA, expense deductions, and ITR filing
- Foreign platforms (Gumroad, Teachable): Export of services = Zero-rated GST, file LUT annually
- Indian platforms (Instamojo, Razorpay): GST @ 18% if domestic turnover exceeds ₹20L
- Section 44ADA eligible: Pay tax on 50% deemed profit if income under ₹50L
- Platform fees: Deductible as expense (reduces taxable income)
The digital product economy has exploded in India. From online courses on Teachable to Notion templates on Gumroad, from eBooks on Amazon KDP to Figma design files, creators are earning lakhs monthly selling digital products. But with this income comes a maze of tax questions: Do I need GST? How do I handle international sales? What about platform fees? Can I use Section 44ADA?
This comprehensive guide covers everything you need to know about taxation of digital products in India for the financial year 2024-25. Whether you're selling courses, templates, eBooks, or stock photos, we'll break down the tax implications platform by platform.
Quick Calculator Access
Understanding Digital Products: What Are We Talking About?
Digital products are intangible goods delivered electronically. Unlike physical products that need shipping, digital products are instantly downloadable or accessible online. Here are the main categories:
- Online courses (Teachable, Udemy, Gumroad)
- eBooks and digital books (Amazon KDP, Gumroad)
- Webinars and masterclasses
- PDF guides and workbooks
- Notion templates and databases
- Canva templates and designs
- Figma design files and UI kits
- Excel spreadsheets and calculators
- Stock photos and videos
- Lightroom presets and LUTs
- Photoshop brushes and actions
- Music tracks and sound effects
- WordPress plugins and themes
- Mobile apps and SaaS subscriptions
- Browser extensions
- Code snippets and scripts
Platform-Wise Taxation: The Complete Breakdown
Tax treatment varies significantly based on which platform you use to sell your digital products. Here's a detailed platform-by-platform analysis:
Platform Details:
- US-based company (registered in San Francisco)
- Platform fee: 10% per sale
- Payment in USD via PayPal or bank transfer
- Payment processing fee: ~2.9% + 30 cents per transaction
GST Treatment:
- Why: Payment from foreign entity = Export of services
- Zero-rated supply under GST (0% tax)
- Applies even if buyers are Indian residents
- No GST registration needed regardless of turnover
Income Tax Treatment:
- Income Classification:Business Income
- Section 44ADA Eligible:YES (if turnover under ₹50L)
- ITR Form:ITR-4 or ITR-3
Example Calculation:
Platform Details:
- US-based educational platform
- Platform fee: $39-$119/month + 5% transaction fee (Basic plan)
- Payment in USD via Teachable Payments or PayPal
- Pro plan: $159/month, 0% transaction fee
GST Treatment:
- Teachable is a foreign entity (US-based)
- Export of services - zero-rated
- Even if students are from India, payment flows through Teachable
Platform Details:
- Royalty: 35% or 70% based on pricing and territory
- Different entities for different markets
- India sales: Amazon Seller Services Pvt Ltd (Indian entity)
- International sales: Amazon.com, Amazon EU entities
GST Treatment - COMPLEX:
Domestic Sales (Amazon.in):
- Sales to Indian customers via Amazon India = Domestic supply
- GST @ 18% applicable
- Must register if annual India sales exceed ₹20 lakh
International Sales (Amazon.com, .co.uk, etc):
- Sales through Amazon.com, .co.uk = Export
- Zero-rated supply, no GST
Important Note
Platform Details:
- Notion: US-based, typically sold via Gumroad
- Figma: US-based, sold via Figma Community or external platforms
- Most creators sell through Gumroad, Lemon Squeezy, or own website
GST Treatment:
If sold via Gumroad/international platform:
If sold directly to Indian customers:
The platform choice matters for GST: Selling through foreign platforms (Gumroad, Teachable, Etsy) is classified as "export of services" - zero-rated GST regardless of turnover. Switch to Indian platforms (Instamojo) only if your customers are predominantly Indian and you've crossed ₹20L domestic threshold. Use our Platform Fee Calculator to compare net earnings across platforms.
Platform Details:
- Revenue share: 37% (instructor promotion) or 3% (organic)
- US-based platform (Udemy Inc.)
- Payments in USD via Payoneer or PayPal
GST Treatment:
- Payment from Udemy Inc. (foreign entity) = Export
- Zero-rated supply regardless of student location
GST on Digital Products: The Complete Picture
Understanding GST for digital products can be confusing. Here's a clear breakdown:
| Scenario | GST Applicable? | Threshold |
|---|---|---|
| Sold via Gumroad to anyone | NO | Export of services - no limit |
| Sold via Teachable to anyone | NO | Export of services - no limit |
| Sold via Amazon.com internationally | NO | Export of services - no limit |
| Sold via Amazon.in to Indians | YES | If turnover > ₹20 lakh |
| Sold directly to Indian customers | YES | If turnover > ₹20 lakh |
| Sold via your own website to Indians | YES | If turnover > ₹20 lakh |
- If selling digital products to Indian buyers via your own platform or Indian marketplace, GST @ 18% applies once turnover exceeds ₹20 lakh
- You must charge GST separately on invoice (e.g., Course: ₹1,000 + GST ₹180 = Total ₹1,180)
- Monthly/quarterly GST filing required (GSTR-1 and GSTR-3B)
- HSN/SAC code for digital products: 998392 (Online educational content)
- Sales through Gumroad, Teachable, Udemy = Export of services
- Zero-rated supply - 0% GST regardless of amount
- Even if buyers are Indian, if payment flows through foreign platform, it's export
- If you voluntarily register for GST (for domestic sales), file LUT for export sales
Income Classification: Business vs Professional
Digital product sales are typically classified as business income under the Income Tax Act, not professional income. Here's why:
| Aspect | Classification | Details |
|---|---|---|
| Product Type | Digital Goods | Trading in digital products = Business |
| Income Head | Business Income | Section 44ADA applicable |
| Presumptive Rate | 50% | If using Section 44ADA |
| ITR Form | ITR-4 / ITR-3 | ITR-4 for 44ADA, ITR-3 for books |
Section 44ADA Sweet Spot
Expense Deductions Specific to Digital Products
If you're not using Section 44ADA and maintaining proper books of accounts, you can claim these business expenses:
| Expense Category | What Can Be Claimed | Annual Range |
|---|---|---|
| Design Software | Figma, Adobe CC, Canva Pro, Notion | ₹15,000 - ₹60,000 |
| Hosting & Domain | Course platform hosting, website hosting, domains | ₹5,000 - ₹30,000 |
| Payment Gateway Fees | Gumroad fees, PayPal fees, Stripe charges | 10-15% of revenue |
| Marketing Expenses | Facebook ads, Google ads, email marketing tools | ₹20,000 - ₹2,00,000 |
| Content Creation | Stock photos, video footage, music licenses | ₹10,000 - ₹50,000 |
| Equipment Depreciation | Laptop, camera, recording equipment | ₹30,000 - ₹1,00,000 |
| Professional Services | Video editor, graphic designer, VA, CA fees | ₹20,000 - ₹1,50,000 |
| Refunds | Customer refunds (deduct from gross income) | 2-5% of revenue |
| Internet & Phone | Business portion of broadband and mobile | ₹12,000 - ₹30,000 |
| Course/Learning | Courses to improve your skill set | ₹10,000 - ₹50,000 |
Platform Fee Treatment
Handling Refunds in Tax Calculation
Digital products often have refund policies (7-day, 30-day money-back guarantees). Here's how to handle refunds for tax purposes:
Annual Sales Summary:
GST Treatment of Refunds:
- If GST was charged on original sale, issue credit note for refund
- Reduce GST liability by the refunded GST amount
- Report in GSTR-1 under credit notes section
Income Tax Treatment:
- Report net sales (after refunds) as gross receipts
- If using Section 44ADA: 50% of ₹2,84,905 = ₹1,42,452 taxable profit
ITR Filing for Digital Product Sellers
The ITR form you need depends on your income level and whether you're using presumptive taxation:
Use if:
- Total turnover under ₹50 lakh
- Using presumptive taxation (50% deemed profit)
- No books of accounts maintained
- Simple, straightforward filing
Use if:
- Turnover exceeds ₹50 lakh
- Want to claim actual expenses
- Maintaining proper books of accounts
- Profit margin less than 50%
Use Section 44ADA (50% deemed profit) if:
- Actual profit margin is close to or more than 50%
- You want minimal compliance (no books, no audit)
- Digital products with low creation cost (courses, templates)
Maintain books and use ITR-3 if:
- High expenses (marketing spend 30%+ of revenue)
- Actual profit less than 50% of revenue
- Turnover exceeds ₹50 lakh (44ADA not allowed)
Example Comparison:
Scenario: Gross receipts ₹30 lakh
Section 44ADA:
Deemed profit: ₹15 lakh
(50% of ₹30L)
Regular Books:
Revenue: ₹30L
Expenses: ₹12L
Profit: ₹18 lakh
Winner: Section 44ADA (₹3L tax savings)
International Buyer Taxation
When you sell digital products to international buyers through platforms, here's what you need to know:
- Tax Treatment: Export of services - No GST
- Income Tax: Fully taxable in India as business income
- Currency Conversion: Use bank credit date exchange rate
- FEMA: Ensure bank account can receive foreign payments
- GST: No GST if buyer is outside India (export)
- Payment Gateway: Use Stripe, PayPal, Razorpay International
- Documentation: Maintain buyer location proof and payment receipts
- LUT Filing: If GST registered, file LUT (RFD-11) for export sales
Common Mistakes Digital Product Sellers Make
If you cross ₹20 lakh in domestic sales (selling directly to Indians via your website), you MUST charge GST @ 18%. Many sellers forget this and face penalties.
Digital product sales are business income (eligible for Section 44ADA), not professional income. Don't file under wrong head and lose out on presumptive taxation benefits.
₹15L from Gumroad + ₹10L from Amazon.in ≠ ₹25L for GST. Only domestic sales (Amazon.in) count toward ₹20L threshold. Gumroad is export, excluded from threshold.
Platform fees (Gumroad 10%, Teachable 5%) are legitimate business expenses. If maintaining books (ITR-3), don't forget to claim these. If using 44ADA, gross receipts = amount before platform fees.
Always convert foreign income using the exchange rate on the date money credits to your Indian bank account. Don't use arbitrary rates or forget to document conversion.
Always report net sales after refunds. If you sold ₹5L but refunded ₹50K, your gross receipts are ₹4.5L, not ₹5L. Issue credit notes if GST was charged.
Real-World Case Studies
Business Details:
- Platform: Teachable
- Product: Digital Marketing Masterclass ($149)
- Annual sales: 200 courses = $29,800
- Teachable fee: 5% = $1,490
- Net: $28,310 ≈ ₹23,63,885 @ ₹83.50
Tax Treatment:
- GST: ₹0 (export of services)
- Income: Business income under Section 44ADA
- Deemed profit: 50% × ₹23,63,885 = ₹11,81,942
- Tax (New Regime): ₹1,83,097
Key Learnings:
- No GST registration needed despite high revenue
- Section 44ADA perfect fit (under ₹50L)
- Simple ITR-4 filing, no books required
Business Details:
- Platform: Gumroad
- Products: 5 different Notion templates ($9-$29)
- Annual sales: $12,500
- Gumroad fee: 10% = $1,250
- Net: $11,250 ≈ ₹9,39,375 @ ₹83.50
Tax Treatment:
- GST: ₹0 (Gumroad is international platform)
- Income: Business income under Section 44ADA
- Deemed profit: 50% × ₹9,39,375 = ₹4,69,687
- Less: Std deduction ₹75,000
- Taxable: ₹3,94,687
- Tax (New Regime): ₹42,734
Key Learnings:
- All sales via Gumroad = Export = No GST ever
- Can scale to ₹50L without changing structure
- Minimal compliance burden
Business Details:
- Amazon.com (US/International): ₹18,00,000
- Amazon.in (India): ₹8,00,000
- Total: ₹26,00,000
Tax Treatment:
- GST: Required! (Amazon.in sales ₹8L < ₹20L, but close)
- Must register once Amazon.in crosses ₹20L
- Amazon.com sales: Export, no GST
- Total income: ₹26L (business income)
- Deemed profit (44ADA): ₹13L
- Tax: ₹2,10,000 (approx)
Key Learnings:
- Must track India vs International sales separately
- Watch Amazon.in threshold closely for GST
- Once registered, charge GST on Amazon.in sales only
Frequently Asked Questions
No. Gumroad is a US-based platform, so all sales through Gumroad are treated as export of services. Export of services is zero-rated under GST (0% tax), regardless of your turnover. Even if you earn ₹1 crore through Gumroad, no GST registration is needed for this income.
No. Both Teachable and Udemy are US-based platforms. Payments you receive from these platforms are for export of services and are GST-exempt. The location of your students doesn't matter - what matters is that the platform paying you is a foreign entity.
Track separately: Sales via Amazon.com (international) are export (no GST). Sales via Amazon.in (India) are domestic and require GST if your Amazon.in sales exceed ₹20 lakh annually. Once you cross ₹20L on Amazon.in, register for GST and charge 18% only on Amazon.in sales.
Yes! Digital product sales qualify as business income, making you eligible for Section 44ADA presumptive taxation. If your gross receipts are under ₹50 lakh, you can declare 50% as deemed profit without maintaining books of accounts. This is highly recommended for most digital product sellers.
If using Section 44ADA (ITR-4): Report gross receipts BEFORE platform fees. Platform fees are ignored - deemed profit is 50% of gross. If maintaining books (ITR-3): Platform fees are deductible business expenses. Report gross revenue, then claim platform fees as expenses.
Yes, absolutely. Use the Telegraphic Transfer Buying Rate (TTBR) on the date the money is credited to your Indian bank account. Maintain bank statements showing INR credited and document the exchange rate used. This is essential for ITR filing and audit defense.
Report net sales (gross sales minus refunds) as your gross receipts. If you sold ₹10 lakh but refunded ₹50,000, report ₹9.5 lakh. For GST: Issue credit notes for refunds and reduce your GST liability accordingly. Report credit notes in GSTR-1.
Yes, you need GST registration. Only the ₹10L from direct India sales counts toward the ₹20L threshold (Gumroad is export). But once you start selling domestically, you must register when domestic sales cross ₹20L. In your case, you're at ₹10L, so monitor closely and register before crossing ₹20L.
Platform fees, design software (Figma, Adobe), hosting costs, payment gateway fees, marketing expenses (ads), content creation costs (stock assets), equipment depreciation (laptop, camera), professional services (designers, editors, CA), internet and phone bills (business portion), refunds issued, and business-related courses.
Maintain books if: (1) Your actual profit margin is less than 50% (high marketing spend), (2) Your turnover exceeds ₹50 lakh (44ADA not allowed), (3) You have significant deductible expenses that would result in actual profit under 50%. Otherwise, Section 44ADA is simpler and saves compliance costs.
Platform-Specific GST Summary Table
Quick reference for all major platforms:
| Platform | Entity Location | GST on Sales | Notes |
|---|---|---|---|
| Gumroad | USA (San Francisco) | NO GST | Export of services - zero-rated |
| Teachable | USA (New York) | NO GST | Export of services - zero-rated |
| Udemy | USA (California) | NO GST | Export of services - zero-rated |
| Skillshare | USA (New York) | NO GST | Export of services - zero-rated |
| Amazon.com (KDP) | USA | NO GST | Export - international sales |
| Amazon.in (KDP) | India | YES @ 18% | If India sales > ₹20L |
| Lemon Squeezy | USA | NO GST | Export of services - zero-rated |
| Your Website (Indian buyers) | India (You) | YES @ 18% | If turnover > ₹20L |
| Your Website (Foreign buyers) | India (You) | NO GST | Export of services |
Conclusion
Selling digital products is one of the most tax-efficient online businesses in India. With most sales happening through international platforms like Gumroad and Teachable, you benefit from GST exemption as export of services. Section 44ADA makes income tax compliance simple for earnings under ₹50 lakh.
Key Takeaways:
- Gumroad, Teachable, Udemy sales = No GST (export of services)
- Amazon.in domestic sales = GST @ 18% if turnover exceeds ₹20L
- Section 44ADA is perfect for digital product sellers (50% deemed profit, no books)
- Always convert USD to INR using bank credit date exchange rate
- Track domestic vs international sales separately for GST compliance
- Report net sales (after refunds) as gross receipts
Related Calculators
Content Creator GST Calculator
Determine your GST registration requirement and calculate GST liability for content creators with multiple income streams
Creator Income Tax Calculator
Calculate income tax for content creators with multiple revenue streams and extensive deductions for equipment and expenses
Platform Fee Calculator for Creators
Calculate net income after platform fees, payment processing charges, and currency conversion for YouTube, Patreon, Twitch, and more
Section 44ADA Presumptive Taxation
Calculate presumptive income for professionals with 50% deemed profit and single advance tax payment benefit