The government has brought in the digital tax economy in to proposal to effect in Union Budget 2018. This is related to the tax profit that is gained by firms which are in digital sector in India.
It is said that this is applicable for all kind of online searches, advertisements done on the net, cloud services and other online products. This will make sure that the profit gained by these companies and firms will be taxed in India. Huge firms like Facebook, Google and Netflix can come under these tax net. Information has been sent to these firms with no response.
Defined in the finance bill as “any transaction in respect of any goods, services or property carried out by a non-resident in India including provision of download of data or software in India” or “systematic and continuous soliciting of its business activities or engaging in interaction with such number of users as may be prescribed in India through digital means”.
“Till now, there was no system to tax them. The equalization levy was imposed only for online advertising which is a very small chunk of their operations. The government is now saying that they have the right to tax such companies under section 9, which have some economic nexus in India.” Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP said.
At World Economic Forum, Sunder Pichai, CEO of Google mentioned that tax should be reformed and structured for addressing the concerns of the country. “As a company we paid, over the last five years, close to 20% in tax. We are happy to pay a higher amount, whatever the world agrees on as the right framework. It’s not an issue about the amount of tax we pay, as much as how you divide it among various countries.” he said.
Arun Jaitley said that this change will boost the digital payment as blockchain technology. He said the government will not support cryptocurrency. “The government does not consider cryptocurrencies legal tender… and will take all measures to eliminate use of these crypto assets in financing illegitimate activities or as part of the payment system,” said Jaitley.