India Launches New Google Tax

June 1, 2016 Taxation in India

NEW DELHI – India’s new Google Tax is expected to raise new revenues and encourage international business to set up offices in the country.

From July 1st India will enact a equalization levy, which has come to be popularly labelled as a the “Google Tax”.

The new tax will be levied as a 6 percent withholding tax, applicable if an individual or business makes payments of at least INR 100 thousand to any offshore business for any digital or online advertising.

If a business in India fails to withhold the tax, the entire expense will not be eligible to be deducted for the purposes of calculating annual profits.

The new tax will not be applied to payments made to businesses with a permanent established base in the country.

The government hopes that the tax will encourage businesses to make use of local advertisers, instead of turning to global providers, such as Google, Facebook, or Twitter.

Further it is expected that the new tax will encourage some international businesses to establish a base of operations in India.

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