Budget 2017: Along with digital push, govt also looking to widen 'Google tax' net

Although, the government has no plans to hike the current equalisation rate of 6 percent, it could be looking at bring in more services under the tax net

FP Staff December 27, 2016 16:06:58 IST
Budget 2017: Along with digital push, govt also looking to widen 'Google tax' net

The government may have been pushing hard its agenda by asking people to adopt to digital transactions in the current demonetisation period, but the Centre at the same time is also looking to bring in more such online transactions into the tax net in the upcoming union budget.

In order to bring more multinational companies under the tax net, the government seems to be working on plans to levy wide ranging digital transactions such as Online sales of goods and services, downloading of software, songs, movies and books, and online consumption of news, a report in the Business Standard has said.

Budget 2017 Along with digital push govt also looking to widen Google tax net

Reuters

"Internationally the trend is to bring more digital transactions into the tax net as multinational companies end up avoiding taxes," the BS report said quoting a government official.

As per the report, a committee set up by CBDT had recommended equalisation levy of 6-8 percent on 13 broad services offered by ecommerce companies.

Although, the government has no plans to hike the current equalisation rate of 6 percent, it could be looking at bring in more services under the tax net, the report added.

Besides this, the committee had also recommended to include other services such as advertising on radio and television, designing, hosting or maintenance of websites, digital space for websites, email, blogs, facility for online sale of goods or services or collecting online payments.

Earlier this year, the government had proposed in the budget to introduce a tax on the income as accrue to a foreign e-commerce company outside India. However, the government starting June introduced a 6 percent levy on online transactions raising concerns that the move would impact the bottomlines of technology companies like Google and Facebook, which are expanding at a brisk pace here.

According to the budget announcement in February, any person or entity that makes a payment of more than Rs 1 lakh in a financial year to a non-resident technology company will now need to withhold 6 percent tax on the gross amount being paid as an equalisation levy.

The prevailing tax structure in India is similar to the one prevailing in Organisation for Economic Cooperation and Development (OECD) nations and European countries.

For full coverage of Union Budget 2017 click here.

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