The Indian government announced rules for an equalization levy or "Google tax" of 6% on payments exceeding 100,000 rupees made by Indian businesses to non-resident companies for digital advertising and other online services without a permanent establishment in India. The levy aims to tax revenue earned in India by internet companies and will impact businesses using sites like Facebook and Google for marketing. Under the new rules, businesses will have to report payments for specified digital services made from June 1, 2016 to June 30, 2017 and failure to deduct the tax will disallow the expenses.

1. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
Central Board of Direct Taxes Notifies Equalisation Levy Rules 2016
The Indian government on Monday announced rules
for equalisation levy or 'Google tax' as its popularly
known for taxation of payments for international
digital services by India Businesses that was
introduced in the Budget.
The specified services covered by the levy include
online advertising, provision for digital advertising
space and any other service to be notified by
government. The rules come into effect from June
1st
2016.
Finance minister Arun Jaitley had announced the
equalisation levy, emanating out of OECD's Base
Erosion and Profit Sharing project, on payments
made by businesses for specific digital services to a
non-resident entity not having permanent
establishment in India.
The idea is to indirectly tax internet giants for money
they make from Indian advertisers, by imposing a
levy on the payments these advertisers make.
The levy was structured based on recommendations
of a panel set CBDT.
Tax experts say businesses will have to start
preparing now that the rules have been announced.
Equalisation levy have made various players sit up
and take notice, especially since this is India's first
step to tax digital economy, and one of the first few
internationally.
Now with rules in place, people need to start
taking action, since the statement of specified
services procured starting June 1, 2016 has to
be has to be reported in the statement to be
furnished by June 30, 2017.
What is this Levy?
From June 1st
, an equalisation levy of 6% will
have to be deducted by a business entity in
India which makes payments exceeding INR
100000 in the aggregate in a financial year to a
non-resident service provider for specified
services.
What are the services that fall under this
rule?
For now, specified services cover online
advertisements, provision for digital advertising
space or any other facility or service for
the purpose of online advertisements. We feel
that this list will expand soon.
How does it impact us?
The move impacts anyone and everyone with
an online setup and who use Facebook or
Google or similar sites for marketing.
What if a firm fails to deduct this tax?
Then the firm or the business owner won't be
allowed to consider the expenses in calculating
taxable profits, which will increase their taxable
income and liability

2. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
About Us
Habibullah & Co. (HCO) is a professional
services firm providing audit, assurance, tax,
financial advisory and consulting services to a
wide range of publicly traded and privately held
companies, guided by core values including
competence, honesty and integrity,
professionalism, dedication, responsibility and
accountability.
At HCO, the interests of our clients are
paramount. Our focus on the mid-market
means we have a real understanding of the
environment in which our clients operate and
are ideally placed to help them grow and
prosper.
Who we are and what we stand for
 Established 1962
 10 Partners
 100 + staff
 6 offices across India
 International Representation through
“Antea- Alliance of Independent Firms”
 Member Firm of The Institute of
Chartered Accountants of India since
1962
 Registered with all major Government
Regulators in India
Our Services
 Accounting and Auditing
 Business Setups in India
 Tax Compliance, Planning and
Management
 Transfer Pricing Advisory
 Business Advisory
Contact Us
For any assistance contact our Managing
Partner for International relations:
CA. Vivek Agarwal
E: vivek@hcoca.com
T: +91-98391-19370
Office in India
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Gorakhpur
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Ranchi
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Mau
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Email
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