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Equalisation levy for specific digital services comes into effect from June 1

India Blooms News Service | | May 31, 2016, at 09:34 pm

#BEPS #OECD #Economic

New Delhi, May 31 (IBNS) The equalisation levy, dubbed the 'google tax', introduced by the Union government in the latest Budget, comes into effect from Wednesday, June 1, according to media reports.

The tax is to be paid by Indian businesses for using international digital services.

Indian businesses, from June 1, have to deduct an equalisation levy of six percent for payments exceeding rupees one lakh in aggregate in a financial year to a non-resident service provider for specified digital services.

The areas where the levy will be applicable are online advertising, provision for digital advertising space and other services that may be notified by the government.

The 'google tax' originated during the Base Erosion and Profit Shifting Project (BEPS) discussions, a project spearheaded by the Organisation for Economic Co-operation and Development (OECD), media reported.

According to experts, the project aims to bring G20 countries on a single platform to introduce measures to ensure tax transparency and curb avoidance by multinationals through aggressive tax planning.

If the Indian entity fails to deduct the tax, it will not be allowed to consider these expenses which will increase the entity's tax expenses and liability, according to the rules.

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