Advertisers visible in India to be levied ‘Google Tax’ from October 2021

Advertisers whose ads are visible in India will have to pay 2% equalisation levy from October 2021 as Google will be passing on the equalisation levy, also known as Google Tax, from October 1, 2021.

The Indian Government had first introduced an equalisation levy in the Finance Act, 2016 on certain non-resident businesses. Initially, a 6% levy was applied on certain “specified services” provided by non-resident service provider, including online advertising, providing space for digital advertising, among others. Tech giants like Google, Flipkart, Facebook, Twitter were thus brought under the ambit of equalisation levy.

In the Finance Bill 2020, the scope of the equalisation levy was extended to include the consideration received by e-commerce operators at the rate of 2%. As per a report carried in the Economic Times, Google will be adding a surcharge of 2% to the invoices it sends to non-India clients whose ads are viewed in India. The levy will be applicable regardless of whether both the buyer and the seller are based in India or outside the country, as long as the ad is visible in India.

While specifying this levy to its clients, Google called it “jurisdiction specific surcharges”.