Google’s Stance on Tax Puts Big Tech in a Spot

Google stance of passing on the 2% equalization levy to all its clients, even if they aren’t based in India, is set to cause trouble for companies such as Amazon, Apple, Twitter, Facebook and LinkedIn as the tax department is likely to ask the other big tech companies to follow suit.

These companies haven’t decided to pass on the levy to customers but the taxman could take Google’s stance as a precedent and demand that other big tech companies follow suit, Going by

Income-tax dept. may scrutinize all transactions of big tech even if the clients and customers are not based in India

The taxman’s definition, any transaction- even between two entities that are not based in India- can be taxed here.

So, if a US-based company decides to advertise with say Twitter Europe, but this advertisement is visible in India, the levy is applicable. The levy will also apply in cases where an Indian IP is used. For instance, if a Singapore citizen visits India, and decides to order some goods from the Amazon website while using hotel Wi-Fi-this too will attract a 2% tax.

Google recently said that from October 1,2021, it will be adding a surcharge to the invoices it sends to non-Indian customers whose ads are viewed in India. “The surcharge is to cover part of the costs associated with complying with the Indian equalization levy, which only impacts non-Indian advertisers. We will continue to pay all the taxes due in India and elsewhere,” a Google spokesperson said responding to an ET query on July 29.

“Google’s stance of passing on the equalization levy to consumers has started the debate about the real impact of digital taxes,” said Ajay Rotti, partner, Dhruva Advisors. In a response to ET’s queries, Facebook said it had no inputs to share. Twitter declined to comment. LinkedIn said it is in compliance with the equalization levy in India. Amazon and Apple did not respond to emails seeking comments till the time of going to press. S-ET

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