It’s a taxman versus internet majors standoff — companies such as Google, Facebook, LinkedIn haven’t paid the April-June quarter’s 2% equalisation levy that fell due on July 7. The new levy was announced in the 2020-21 budget.

Companies claim this is due to lack of clarification on issues such as whether the tax will be payable on gross or net revenue. 

Currently, India and the United States are working to resolve a dispute on the equalisation levy, which the US opposes on grounds of “fairness”. India had responded by pointing out a US Supreme Court ruling that said physical presence of an online company was not required for imposing a tax in a particular location. Most internet majors facing the tax in India are American companies.

Executives of internet majors and tax officials spoke to ET off record. Questions sent to income tax department, Google, Facebook, LinkedIn and Amazon didn’t elicit any response till press time.

The next due date is October 7 when these companies will need to pay the tax for the July-September quarter as well as the dues for the April-June quarter on which interest will be charged.

Failure to pay the tax in the second quarter will lead to penalties being imposed.

The tax department’s argument for the levy has been that foreign internet majors earnings from India are escaping the tax net. In 2016, the government had imposed a 6% tax on these companies’ advertising revenues, which, tax consultants say, is paid by all assesses.

Source: Economic Times