Surprisingly there was no mention during the Budget 2017 on increasing the scope of equalisation levy. However, there is some indication that the government does plan to increase the scope of the levy.
Under the new definition, the government is looking at a 6% tax levy on all online multinational companies that earn revenue from India. Equalisation levy, colloquially called Google tax, could soon ensnare the likes of IBM, Microsoft, Amazon Web Services, Apple and Netflix, which provide online services in India.
Taking leaf from BEPS, India become the first nation to tax digital transactions when it introduced the equalisation levy of 6% on the advertising revenue of multinational web companies in June last year. Currently, the equalisation levy is applicable only on online advertisements, affecting a handful of companies including Facebook, Google, Yahoo and LinkedIn. However, most of these companies are actually passing on the cost to the hands of startups in India using such platform.
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