India’s Google tax collection up 64% in Q3, Bengaluru rakes in more than half

The US recently called this tax 'discriminatory against US companies' and inconsistent with global tax principles

Even as the US dubbed the equalisation tax, or the Google tax, ‘discriminatory’, India saw a 64 per cent growth in its collection after the third instalment deadline on January 7, raking in as much as Rs 1,436 crore after Q3.

The collection in the same period last year was at Rs 877 crore, a government official told Business Standard.

This comes as India saw a mend in its direct tax collection in January as the contraction reduced to 9.6 per cent from November's 13 per cent.

A federal investigation in the US has even threatened to slap tariffs against India due to this tax. The US has called the tax unreasonable, burdensome and inconsistent with international tax policies.

The Google tax is applied to non-resident e-commerce companies in India. Against the ‘discriminatory’ allegations, India has maintained that the levy was to ensure a fair and competitive market for local and foreign e-commerce companies.

Till 2019, the tax rate was at 6 per cent for digital advertising services, but the tax’s scope has been widened since then to include foreign e-commerce companies with turnover of over Rs 2 crore till April 1, 2020. These companies will be charged a 2 per cent levy.

Companies like Adobe, Uber, Udemy, Zoom.us, Expedia, Alibaba, Ikea, LinkedIn, Spotify, and eBay come under the ambit of this tax.

India collected direct tax of Rs 6.32 lakh crore after refunds on January 8. This was about Rs 6.99 lakh crore in the 2019-2020 period.

“Collections have picked up the pace, in line with the overall economic activity. We hope to match last year’s collection in direct taxes of Rs 10.53 lakh crore. It may be slightly higher, accounting for the Vivad Se Vishwas dispute resolution scheme collection,” said a government official is quoted as saying in the report.

Bengaluru accounted for about half of the total Google tax at Rs 723 crore, a growth of 45 per cent while Hyderabad saw a collection of Rs 422 crore, compared to 2019’s Rs 269 crore.

Delhi saw a whopping 376 per cent growth in the levy collection at Rs 181 crore, compared to Rs 38 crore last year. Mumbai’s collection more than doubled at Rs 82 crore.

According to a statement by the Government of India, it will examine the determination/ decision notified by the US in this regard and would take appropriate action keeping in view the overall interest of the nation.