India’s collection under equalisation levy (EL), or the so-called Google tax, more than doubled in the eight months of FY22, even as New Delhi and Washington struck a deal to phase it out from FY23 when the global tax deal is slated to come into effect.
The 2 per cent digital levy on non-resident digital operators such as Amazon, Google and Netflix, yielded Rs 2,209 crore as on December 1, up 128 per cent from the year-ago period, according to a government official.
India and the US reached a compromise, under which EL will continue during the transition period between April 1, 2022, and March 31, 2024, or once the global pact comes into effect, whichever is earlier. However, during this time, the companies will be able to accrue the benefits in the form of credits for the tax paid in excess of that allowed under the OECD tax pact, signed by 136 countries. In turn, the US will not impose retaliatory tariffs announced earlier on imports of basmati rice, jewellery, seafood, etc., from India.
While India is on course to collect around Rs 3,000 crore from EL this year, revenue from the global tax deal is unlikely to be so much.
The trade-off is that it will bring in tax certainty for non-resident digital players.
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