Today we will discuss the Equilasation levy (Google tax) in India, what is the meaning of google tax ,rate of google tax, its implication to the startup business.
Meaning of Google tax
Government of India has levied a equilasation levy which is popularly known as google tax. Equilasation levy will be levied at 6% for any payment made to outside India for the purpose of online advertisement.
Why Equilasation levy?
Equilasation levy is levied under income tax to the company who has no establishment in India. As the company are earning in India and not paying any taxes in India neither service tax nor tds so government of India has levied the Equilasation tax.
Who will deduct the Equilasation levy?
Equilasation levy will be deducted by any resident in India and NRI having permanent establishment in India for the specified services taken from the NRI (non resident Indian) having no permanent establishment in India.
Applicability of Equilasation levy?
It will be levied on online advertisement
Any facility or service for online advertisement
sale of digital space
Any other service notified by the central government
Exclusion from Equilasation levy?
A) If any NRI having permanent establishment in India it will not be applicable.
B) amount made for the service is less than Rs 1 laks, it will give relief to the small startup
C) Payment given by end user (Consumer) not by business man. this levy is B to B(business to business) only.
Rate and Due date of tax
Equilasation levy will be levied at the rate of 6% on the gross amount and to be paid by 07th of the next month.
Equilasation levy Impact on Indian start up
Cost of Equilasation levy will be indirectly bear by the Indian start up, As Indian start up is taking online service from google and Facebook for advertisement, it will increase the advertisement cost of Indian start up.