‘Google Tax’ Is Being Worked Out By Govt; Downloading Apps, Games, Software May Become Costly!

If you thought that Govt. of India has forgotten about Google Tax, or Equalisation levy of 6% on all revenues made via the Internet and by Internet companies, then wake up the reality. Govt. is right now working out the details, and very soon, an announcement would be made in this regard.

As per ET, an unnamed official has claimed that in the next few months, this Google Tax would be officially rolled out. And once that happens, then simple online activities such as downloading apps, games and software can be taxed as well, making them expensive activities.

When Will Google Tax Come Into Force?

As per the official, Govt. had earlier decided to introduce this Google Tax by December of 2016. However, the regulations and rules were yet to be decided, and the date of execution was further postponed to post-Budget session.

Now, no other country in the world imposes such Equalisation levy on Internet-based revenues, and India would be the first such country to introduce the same. Maybe this is the reason that the exact framework of the tax regime hasn’t been decided yet.

The official said, “It was earlier decided that by December this year the levy would be applicable on applications (apps) bought on platforms like Google or Apple. However, due to other regulatory changes, equalisation levy was postponed for the budget,”

Once the Equalisation levy or Google Tax comes into force, companies like Google, Bing, Netflix, Amazon, Flipkart, Apple and every such company which either provides services or sells products would come within its gambit.

If you are describing it as a scary scenario, then you are not too far from the truth.

Google Tax or Anti-Digital India Move?

As of now, this Equalisation levy is only applicable on revenues generated via online advertisements; and this is the reason that only handful of companies like Facebook, Google, LinkedIn, Twitter etc are covered under this tax.

However, once the Equalisation levy is passed for all companies which generate online revenues, then it will have a major negative effect on the entire Digital India mission.

As we had reported earlier, a preliminary report by Govt. of India listed these 13 activities which can be covered under the Google Tax, and forced to pay 6% tax:

• 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

Another set of report state that only B2B transactions would be covered under this special tax and B2C would be exempted.

We will keep you updated as more details come in..