Side-Effects of Digital India – Emails, Blogs, Downloads Shall be Soon Taxed Under Ecommerce Levy

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Online Internet tax Taxation

What is the common theme between tax and friction? Both are necessary evils which we, human beings need to embrace and live with.

In a decision which can have far reaching consequences, Government is all set to brutally execute a special ‘ecommerce levy’ which will tax simple online activities such as sending and receiving emails, downloading content and even blogging.

A special committee formed by Central Board of Direct Taxes has recommended 6-8% tax on 13 such online activities which has been strangely clubbed with the ecommerce industry. In case Govt. accepts these recommendations, then the future of Digital India campaign can be marred with heavy taxations on these online activities which we had taken for granted since long.

Note here: This special tax on digital activities and ecommerce is up and above 6% special tax on digital advertisements which Govt. has already approved. We had termed this as anti-Digital India move.

At a time when states like Uttranchal, UP, Assam and others are imposing additional tax on ecommerce transactions, this new tax diktat isn’t just bad news; it’s actually scary.

The Logic Behind This New Tax

The committee formed by Central Board of Direct Taxes has used the traditional ‘Base Erosion and Profit Shifting’ guidelines of The Organisation for Economic Co-operation and Development (OECD), using which this new special 6-8% tax on digital activities has been suggested to the Govt.

Digital advertisers and digital advertisement companies like Google and Facebook would be heavily influenced by this tax, as Govt. will anyways charge 6% equalization tax on them.

Which Digital Activities Would Be Charged?

As per the recommendations made by this special committee, the following are the activities which can be taxed from now on:

  • Designing, developing websites for clients (domestic and international)
  • Digital advertisements
  • Digital tools/software used for TV/Radio advertisements
  • Websites which provide space for advertisements
  • Emails which are sent/received for commercial activities
  • Online content used for commercial purposes or recreational purposes wherein digital advertisement can be implemented
  • Online computing, blogging, online data or any activity related with digital medium
  • Any provision/service used for uploading, sharing, storing or distributing digital content
  • Downloading music/videos
  • Downloading games and software/tools from Internet
  • Facilities for collecting online payments/wallets

There is a silver lining to this though, if you may call it – only B2B transactions/activities has been recommended for taxing, not B2C. But in the online world, where rules of doing businesses is changing, it can be a massive task to determine which activity can be described as B2B and which is B2C.

More information is awaited in this regard, as the Govt. is considering the recommendations; and a formal announcement would be made soon.

[Image Source: Shutterstock.com]

11 Comments
  1. Mud says

    Hang on,….. this isn’t an early April Fool’s joke, is it?

  2. Mud says

    Has our govt gone fukking MAD or something?

  3. Albert says

    This is not side effect of Digital India. Big pops are dancing by the name “Smile” powered by Media. From this speed India will definitely become dominant country in Asian market. ;)

  4. Vinay says

    Wrong presentation. The tax is for foreign companies, who are not paying any taxes in India, but still taking payments from here. They are not paying service tax also, for which Indian providers have to pay service tax. This tax will give absolute level playing field to local players.

    1. Mohul says

      Vinay: How is it wrong ‘presentation’? Did I write anything which is factually not correct? Yes, you may differ on the opinion part, but I don’t think the ‘presentation of facts’ is wrong here. This level playing field is actually against the principles of free market and digital economy (this is my opinion on a fact..)

  5. Santokh Singh Saggu says

    Definition of Government: A bandit appointed by citizens of the nation to terrorize and loot the citizens themselves in the name of Tax.

    Implementing tax after tax is tax terrorism and nothing . Although it seems that politicians are No.1 haraami, but IAS officers and some stupid foreign returned people with foreign degrees who are in the advisory board of government are also equally haraami who are filling the ears of politicians with all the stupid taxes . They all want a big shabaashi on their back from government officials and want to show their intelligence to politicians.

    1. Albert says

      Ha ha Well said.

  6. Rajeesh Nair says

    This is seriously brutal. How can these morons come up with such a proposal?

    eCommerce, blogging and several other digital based activities in India has given a new horizon for individuals and lower down the unemployment ratio in the country. Also, digital mode is also providing the much needed encouragement to the entrepreneurial shift that would result in more businesses and in the end more jobs for the individuals.

    We are already paying for the internet connectivity, which is not even at par. And now, they want to tax us for blogging, downloading content, sending and receiving emails. Paypal and banks already charge a good amount for online transactions.. “Aur kitna tax lagayenge??”

    Till date, I was just thinking that my ideologies and the current Government’s ideologies don’t match but now I will be 100% sure that we have elected a moronic party if this proposal is accepted by the current Government of India…

  7. Anand says

    What a Shame it was, in future they may charge service tax for using paid toilet. We are getting taxed every nook and corner.

  8. Robinsh Kumar says

    It’s a Killer activity to slow down the Digital India campaign.

    I think government should not bury the Internet users under heavy taxation, it should be as it is.

    1. Shahrukh says

      i though government will make this money Tex free in future as we are bringing the foreign countries money in our country which is good for our countries economy but they want money from us also… this is completely bullshit ….

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