Govt gets Rs 939cr from online ads on Facebook, Google

The Tax Department collected Rs 939 crore from taxes levied on payments made to digital advertising platforms such as Google and Facebook from Indian entities in FY19, according to a report by Mint.

A year ago, the tax collection stood at Rs 590 crore, indicating a 59% jump in the year ended March.

The rise in tax collection means that Indian entities paid digital platforms at least Rs 15,650 crore to place advertisements compared to Rs 9,800 crore they spent in the previous year.

According to the law, the advertiser needs to deduct the levy of 6% at source and deposit it with the Indian government on behalf of the offshore digital corporation if the advertiser has spent more than Rs 1 lakh on advertising on overseas platforms in the previous year. Thus, the actual spending by Indian entities may be higher than what the tax collection numbers indicate.

A rising use of internet and wide availability of smartphones have contributed to the growth of the digital economy, offering growth possibilities for both domestic and overseas businesses. According to a February report by the Ministry of Electronics and Information Technology and McKinsey and Co., India can create up to $1 trillion of economic value from the digital economy in 2025, up from about $200 billion at present.