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1) Did you pay a service tax on your earnings?
2) Can you deduct business expenses from the total income - like salary of employees, adwords, hosting etc?
3) Do you also put in your regullar expenses as business expenses? Like resturaunt bills, grocery bills etc?
4) I am not very familiar with the tax return procedures - do you have to submit your bank account records?
Also, if anyone of you know any tax consultant in Delhi who is familiar with adsense type of situation please send me a sticky?
But there's a high possibility that Adsense earnings could fall in the service tax net as it is equivalent to renting space on your website to a third party.
Just like Government charges tax from building owners in Mumbai who display hoarding on their roof tops.
Hoardings ~ Adsense Ads
Roof Top ~ You website real estate
[In case the URL is removed search for "adsense service tax india" ]
Now if Google is paying a service tax then perhaps adsense publishers will also fall in the same category.