What is Google Tax ?
Google Tax is the tax on the online services which would be provided by the nonresident foreign companies to the Indian citizens for availing services and with holding the tax of 6% as equalization levy on the gross amount and deposit the same to the government. The entities which doesn’t have permanent establishment in India and where the total payments to the foreign entities, exceeds Rs. 1 Lakh, than Google Tax would be deducted.
Which services are included in it ?
All the services which are performed online such as online advertising, distributing digital content, downloading videos or music, downloading e-books or PDFs, e-commerce transactions, online new reading, online search engine, online maps, online software applications. It should rather be noted that this is just and illustrative list and the ambit of this tax would be increased further.
Why such Tax ?
It is but obvious that the question will come in your mind that what is the need for levying such tax; the only reason to levy such tax is to bring the big companies like Google or Facebook under the ambit of Law. These companies are earning huge income by way of advertisements and other sources but are not paying single tax as they have routed the income through tax haven countries.
Analysis or Effect of Google Tax:
There should be question in mind that how the Google Tax would be calculated. There are two alternatives available. Any of the two can be adopted. Here the purpose would be to tax the big giants. But the foreign entities do not accept the proposal than the tax liability would be on the small entrepreneurs and startup which takes the services from the foreign entities to earn the name.
Consequences of not deducting or depositing:
If the Indian citizen is unable to deposit the said tax to the government or tries to evade the tax, then as per the proposed levy, the expense would not be allowed as expense while calculating the taxable profit. Recommended Articles
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