Google Tax, Amazon Tax or Facebook Tax: A Brand-new Tax In India, All might not know about this, but in the existing Union Budget of 2016, Finance Minister has actually proposed to levy a totally various and distinct tax in India which is basically called Google Tax. A committee which was formed for the taxation of e-commerce transactions provided the report to finance minster for brand-new levy to 13 new services, that includes online advertisements and cloud storages.
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Google Tax, Amazon Tax and Facebook Tax
What is Google Tax?
Google Tax is the tax on the online services which would be supplied by the nonresident foreign business to the Indian residents for availing services and with holding the tax of 6% as equalization levy on the gross amount and deposit the very same to the government. The entities which does not have irreversible facility in India and where the total payments to the foreign entities, surpasses Rs. 1 Lakh, than Google Tax would be deducted.
Which services are consisted of in it?
All the services which are carried out online such as online marketing, distributing digital material, downloading videos or music, downloading e-books or PDFs, e-commerce deals, online brand-new reading, online search engine, online maps, online software application applications. It should rather be noted that this is simply and illustrative list and the ambit of this tax would be increased further.
Why such Tax?
It is but apparent that the concern will come in your mind that what is the requirement for levying such tax; the only factor to impose such tax is to bring the big business like Google or Facebook under the ambit of Law. These business are making big earnings by method of advertisements and other sources however are not paying single tax as they have routed the earnings through tax haven countries.
Analysis or Impact of Google Tax:
There should be question in mind that how the Google Tax would be determined. There are two alternatives available. Any of the 2 can be adopted.
- If the services rendered by the foreign entity amounted to Rs. 5,00,000 Then the Google Tax on that quantity would be Rs. 30,000(Rs. 5,00,000 6%). Now the staying amount of Rs. 4,70,000 must be paid to the foreign entity. Here the foreign entity needs to bare loss of Rs. 30,000
- If the foreign entity is not all set to bare the loss of Rs. 30,000, than the individual needs to bare such quantity. The Indian person would be paying Rs. 5,00,000 to foreign entity and Rs. 30,000
Here the purpose would be to tax the big giants. But the foreign entities do not accept the proposition 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 transferring:
If the Indian resident is unable to deposit the said tax to the federal government or attempts to avert the tax, then as per the proposed levy, the expense would not be allowed as cost while determining the taxable revenue.
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