CBDT to Impose Tax on Large Tech Companies Operating in India

Budget 2019 has initiated discussions about retaining the corporate tax rate at 25% and 30% for corporations with income within Rs.400 crore and above Rs.400 crore respectively.

Adding to the discussion, the Central Board of Direct Taxes (CBDT) is planning to take new ways to tax tech giants such as Google, Facebook, Uber, and Amazon. These companies invoice their revenues out of India but have operational units in India making minimum profits. 

CBDT is speculated to meet up with the Organisation for Economic Co-operation and Development (OECD) to discuss this. It is said that developed internet economies across the world are exploring new ways to tax giant companies. India is a key partner country of OECD, headquartered in France.

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According to income tax laws, India can tax the profit made by the Indian entity of a foreign company. But, taxes can be imposed on the amount attributed as profit by these companies.

An official shared with Times of India that India is being cautious about bringing laws that are in line with international practice. A threshold limit on the maximum revenue will be defined; any profit beyond this threshold should be reported as an Indian firm. 

Many discussions and consultations are expected to tale place before CBDT takes a final call on the issue at hand. Once a final call is taken, a draft of the same will be prepared by CBDT to be submitted to the finance ministry. No timeline has been set on coming up with a new taxation policy for these large tech companies as yet.