Zee Media Bureau
New Delhi: Finance Minister Arun Jaitley in his Budget speech this year proposed an 'equalisation levy' of 6 percent on services pertaining to cross border digital transactions to give effect to the Base Erosion and Profit Shifting (BEPS) project of the OECD.
In common usage, this equalisation levy has come to be known as Google tax because it will mainly affect popular tech giants Google, Yahoo, Twitter and Facebook.
Here are a few things you would like to know about the new Google Tax
What is Google Tax?
The equalisation levy will provide for a levy of 6 percent on "specified services received or receivable by a non-resident not having permanent establishment (PE) in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India".
Which companies will have to pay Google Tax?
As per the BEPS action plan, OECD has recommended to impose a final withholding tax on certain payments for digital goods or services provided by a foreign e-commerce provider or imposition of a equalisation levy on consideration for certain digital transactions.
The specified services would include online advertising or any services, rights or use of software for online advertising, including advertising on radio and television, designing, hosting or maintenance of websites, digital space for website, e-mails, blogs, facility for online sale of goods or services or collecting online payments.
What is the threshold?
In order to reduce burden of small players in the digital domain, the memorandum to the Finance Bill said no such levy would imposed if the aggregate amount of consideration does not exceed Rs 1 lakh rupees in any previous year.