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'Google tax' collection drops 30% to meagre Rs 216 crore in Q1FY21

BusinessToday.In     July 9, 2020

The equalisation levy, popularly knows as Google tax, levied on foreign e-commerce companies operating in India showed muted collections in the first quarter (Q1) of the current financial year.

According to preliminary collection figures, the yield fell 30% following the first instalment payment deadline ended on Tuesday, as against the same period last year.

Rs 216 crore has been mopped up, as on Tuesday, against Rs 309 crore collected in the same period last year, sources told the Business Standard.

Delhi and Mumbai recorded a joint collection of Rs 23 crore, as against Rs 35 crore in the first quarter (as of July 7) of the previous year. The numbers may possibly be revised upwards basis last-minute payments by foreign players, sources further told the news daily.

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Bengaluru and Hyderabad administrations reported Rs 92 crore worth of collections each, as against Rs 174 crore and Rs 89 crore, respectively, in Q1 of the previous year.

E-commerce players that fall under the ambit of the equalisation tax include Google, Facebook, LinkedIn, Udemy, Alibaba, eBay, Uber, Adobe, Expedia, Spotify, Ikea,, and Expedia.

Many companies have voiced their incapacity to adhere to the rigid time frame as the Centre revised the payment form barely three days before the deadline. Moreover, there was no clarity on various issues, comprising the foreign exchange conversion rates to be used for payment, and getting permanent account number (PAN).

Furthermore, the companies have also sought clarity over assessment of value of consideration for the applicability of the levy, the report stated.

Meanwhile, companies and consultants alike are still hopeful that the government will give them an interest waiver.

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The 2 per cent Equalisation Levy was introduced in the 2020-21 Budget and came into effect on April 1, 2020. The deadline for the payment of first installment of tax for April-June was July 7 (2020). The tax is levied on considerations received by e-commerce operators from online supply of goods or services.

As per law, late-payment of Equalisation Levy attracts interest at the rate of 1 per cent per month or part of the month. Non-payment can result in a penalty equal to the amount of Equalisation Levy, along with the above mentioned interest.

Equalisation Levy was first introduced through the Finance Act of 2016, at the rate of 6 per cent on payments for digital advertisement services received by non-resident companies without a permanent establishment (PE) here, if these exceeded Rs 1 lakh a year. The 2020-21 Budget expanded its scope to include considerations received by non-resident e-commerce operators from e-commerce supply or services.

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