Cloud computing companies and content providers with clients in the country may be needed to pay balance levy on their revenue from the next fiscal year as the government grows the scope of a tax levied on the advertising income of multinational Internet firms, said the individuals familiar with the matter.
“The gamut of equalisation levy could now cover cloud computing and entertainment services provided to Indians by multinationals. The change in law could come in the upcoming Budget,” a person familiar with the matter said.
India became the first country to impose tax on digital transactions when it presented the equalisation levy of 6%
— also known as the Google tax — on the advertising income of multinational web companies in June. Presently, basis the feedback from senior tax experts, the government is enlarging the ambit of the impose.
If the change is made in the Budget planned for February 1, the tax could be applicable from the financial year starting April 1, 2017, with likely repercussions on clients of cloud-based services and online entertainment such as streaming video and audio.
“If the levy is extended to other companies like those providing cloud computing or online entertainment, customers may see their costs for these services going up by about 6-8% as some companies may choose to pass on the cost,” said a partner at BMR Advisors, Shefali Goradia.
While the balance imposes is 6%, the genuine weight could be around 7-8%, for the most part because of the netting up of charges. Presently, the balance exact is relevant just on online commercials, influencing a modest bunch of organizations including Facebook, Google, Yahoo and LinkedIn. The greater part of these organizations, aside from LinkedIn, passes on the extra cost to their clients.
The administration needs to widen the extent of the adjustment exact in a staged way, said individuals near the improvement, and this could incorporate even the downloading of applications on cell phones. “It was before chosen that by December this year the demand would be appropriate on (applications) purchased on stages like Google or Apple. Be that as it may, because of other administrative changes, adjustment require was put off for the financial plan,” the individual with information of the matter said.
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Sameeksha Bhardwaj, From ITvoir News Desk