Google Tax India – What you need to know?
What is Google Tax:
Google tax is the popular term used to refer to a diverted profits tax. In 2014, Spain imposes a royalty charge on Google when its news site Google News uses material belonging to a Spanish publisher.In this response Google stopped cease collating such articles on Google News 🙂
Google tax is not just related to Google,its used a common term and can be applied on other tech giant like Amazon, Yahoo etc.
How Google Tax is related to India?
OK, But how Google Tax is related to India now? For this lets take a example, lets say you are having blog and receiving good income from Google Adsense program, are you paying any tax on this income?
In order to tap tax on income accruing to foreign e-commerce companies from India, finance minister Arun Jaitley proposes Google tax in union budget:
“…..it is proposed that a person making a payment to a non-resident [technology company], who does not have a permanent establishment, exceeding in aggregate 1 lakh in a year, as consideration for online advertisement, will withhold tax at 6% of gross amount paid, as equalisation levy.”
With this, India has joined a list of other Organisation for Economic Co-operation and Development (OECD) and European countries that are looking to plug the tech tax. The project aims to bring G20 countries on a single platform to introduce measures to ensure tax transparency and curb avoidance by multinationals (MNCs) through aggressive tax planning.
Currently the equalisation levy relate to online advertising only. Few experts worried as many more digital services or entire B2B services could be brought under its ambit.