Google tax collection rises 18% after second instalment deadline

The equalisation levy or the Google tax collection posted a double-digit growth at the end of second quarter of the current fiscal year, indicating that several multinational e-commerce enterprises, including Google and Netflix, complied with the digital tax after initial resistance.  

The mop-up rose by 18.7 per cent after the second instalment deadline ended Wednesday, compared to the same period last year, preliminary collection figures showed. 

As of Wednesday evening, total equalisation levy collections so far stood at Rs 647 crore, as against Rs 545 crore in the same period last year, sources said.  

The government this year had expanded the scope of equalisation levy to non-resident e-commerce operators with a turnover of over Rs 2 crore. The levy only applied to digital advertising services at the rate of six per cent till 2019-20. The new levy came into effect from April 1 this year.   

There is a possibility of some upward revision in the number based on last-minute payments by foreign players, they added. In the first quarter only, about Rs 291 crore was collected by the deadline, July 7, with several multinational companies expressing their inability to comply with the stiff timeline as the government amended the payment form barely three days prior to the deadline.  

Besides, there was a lack of clarity on several issues, including forex conversion rates to be used for payment and obtaining permanent account number (PAN).  

However, by September, over Rs 400 crore was collected as the first quarter equalisation levy payment, with more payment trickling in past the deadline. 

E-commerce companies that fall under the equalisation levy scope include Adobe, Uber, Udemy, Zoom.us, Expedia, Alibaba, Ikea, LinkedIn, Spotify, and eBay.

Late payment of the equalisation levy attracts interest of 1 per cent per month and penal consequences of up to the value of equalisation levy could be imposed. 

The expansion of the levy to e-commerce operators has invited the section 301 investigation by the United States, which has termed the tax 'discriminatory' against American companies.