Google India tax row: $2 billion remittance in 5 years may add to tech giant’s load

Google India has remitted a total of Rs 16,119.6 crore ($2.18 billion) towards purchase of advertising space, which is the biggest cost item in its P&L statement under Miscellaneous expenses for the period 2013-14 to 2017-18, as per regulatory filings made with the Registrar of Companies. Tax authorities in India have contended that such transfers are not cost or transfer of profit, but ‘royalty’, which is subject to tax ITAT’s October 2017 ruling for the assessment years 2007-08 to 2012-13 directed Google India to pay tax on Rs 1,457 crore — the total amount that it had remitted to Google Ireland during that period. Google India appealed against the ruling in the Karnataka High Court, following which it won an interim stay. The next hearing is scheduled for later this month. The equalisation levy is a 6% upfront tax that advertisers have to pay to digital service providers, and is also known as ‘Google tax’. This would mean that in addition to the tax on Rs 1,457 crore — the amount transferred between 2007-08 and 2012-13 — Google may have to also pay tax on the Rs 7,546 crore transferred for purchase of advertising space between 2013-14 and 2015-16, an analysis of its financial statements reveals. However, for the period after FY17, when the equalisation levy was introduced, there may be no further tax charged on royalty, said tax officials.

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