Foreign Platforms Dealing With Indian IP Address May Need to Pay ‘Digital Tax’

The Central Government, after proposing a new tax regime, is now considering to introduce a new digital tax. This will give means to levy taxes on foreign platforms that are selling, advertising, or streaming to Indian IP addresses. Furthermore, the government is also reported to be working on ‘global digital tax’. 

The provisions of the new digital taxes are likely to be announced after the Organisation for Economic Cooperation and Development (OECD) is fully constituted. If this bill is passed, the government will be able to impose taxes on the revenues of the e-commerce firms such as Alibaba, Amazon, eBay, and so on, who sell goods to their users or customers. 

Apart from e-commerce firms, online streaming giants such as Netflix and Amazon too would be liable to pay the new digital tax. Furthermore, companies such as Google and Facebook, who make use of cookies for monetisation to put up host-targetted ads, will also be liable to pay this tax.

Also Read: Union Budget 2020: Not All Deductions Are Disallowed in New Tax Regime

Back in the year 2016, India introduced a 6% equalisation tax which is also known as ‘Google Tax’. These amendments are a part of the changes that are going to be proposed in the Finance Bill. The Finance Bill supposedly presents to include new source laws that are going to classify some types of revenues of an overseas company functioning in India to be Indian origin, thus making it taxable here. 

This move is considered to be on the similar lines of the evolving digital economy around the globe. Interestingly, the developments around the digital tax have come after the Minister of Commerce and Industry said that Amazon is not helping India by investing USD 1 billion. 

He later clarified that his statements were misinterpreted and said that the Union Government embraces all investments. However, companies should ensure that they follow all rules and regulations set out by the nation. He further went on to say that investments should in no way affect small traders by building unjust contest. 

Recently, the Competition Commission of India (CCI) had directed for an inquest on the supposed competition law violations by Flipkart and Amazon. It is interesting to see how e-commerce and online streaming giants respond to new changes. 

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