Google Tax: Government re-thinking equalisation levy

Google Tax: Government re-thinking equalisation levy

The government is exploring changes to the equalisation levy, and may stop charging the tax on digital transactions either partially or in its entirety for a year as it works on the options, people with direct knowledge of the matter said.

The government is doing a cost-benefit analysis and has reached out to stakeholders to figure out if it needs to suspend or shelve the 2% equalisation levy imposed this fiscal year on any purchase by an Indian or India-based entity through an overseas ecommerce platform, they said.

Many Indian startups and stakeholders are also pushing to shelve or reduce the 6% equalisation levy, the so-called Google tax, charged on the advertising revenue that overseas companies such as Google, Facebook and Netflix generate from India. The burden of this tax eventually falls on the local startups and others who advertise on these platforms, as most digital majors pass on it to them. The government is looking at this as well.