After introducing a new 'optional' tax regime, the Centre is mulling on introducing a new digital tax, state reports on Friday. Introducing a provision to tax any overseas platform advertising, selling or streaming goods to an Indian IP address, the government is reportedly taking a step towards a global digital tax. The new digital tax will reportedly be levied onec the Organisation for Economic Cooperation and Development (OECD) framework is finalised.
Experts state that once the new tax bill is passed, the Centre will be able to tax revenue of e-commerce firms such as Amazon, Alibaba and eBay which sell goods or services based on data collected from its users apart from streaming giants like Amazon, Netflix. Moreover, firms like Facebook and Google which host targetted advertisements and monetize data using cookies will also be taxed. India had levied a 6% equalization tax also referred too as 'Google tax' in 2016.
The above-mentioned changes are among other changes to be introduced in the Finance Bill, as per reports. The Finance Bill reportedly proposes to add new source rules which will classify certain types of income of a foreign firm operating in India to be of Indian origin - making it taxable in India. This move is allegedly proposed to be on par with the evolving digital economy throughout the world.
This development comes weeks after Union Commerce Minister Piyush Goyal, during the Raisina Dialogue 2020 held in New Delhi, had said that Amazon is not doing a favour to India by investing a billion dollars in the country. However, later he said that his statement was misinterpreted and clarified that the government welcomes all investments but it should adhere to rules and regulations while adding that these investments should not hamper small traders by creating unfair competition. Currently, the Competition Commission of India (CCI) has ordered a probe into alleged competition law violations by Amazon and Walmart-owned Flipkart.