India notifies digital tax threshold of Rs 2 crore and 300,000 users

India notifies digital tax threshold of Rs 2 crore and 300,000 users

BAKU, Azerbaijan, May 4

Trend:

India on Monday notified a revenue threshold of Rs 2 crore and a limit of 300,000 users for non-resident technology firms such as Google, Facebook, Netflix, to pay tax in India under new or revised bilateral tax pacts.

This is part of the Significant Economic Presence (SEP) principle, which was introduced in the Finance Bill 2018-19, and which widened the scope of ‘business connection’ to include provision of download of data or software, if aggregate payments from such transactions exceed a prescribed amount, or if a multinational's interaction is with a prescribed number of users.

“…the amount of aggregate of payments arising from transaction, or transactions of goods, services or property carried out by a non-resident, with any person in India…including download of data or software in India during the previous year, shall be Rs 2 crore…the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be three lakh,” said the notification issued by the ministry of finance.

This will come into effect from April 1, 2022.

However, the existing double taxation avoidance agreements will not be covered under the proposed change, implying that in order to tax Facebook, Google and the like, India will require to renegotiate the tax treaty with the US.

The digital companies will come under India’s tax net only when the existing treaties get reviewed or when new ones are signed.

“Considering that the threshold has been kept quite low, many non-residents would come under the ambit of SEP. However, a non-resident can still take shelter under the tax treaties since India’s existing treaties contain the conventional concept of permanent establishment (PE) for taxing business profits of a non-resident and the inclusion of SEP in the Act will not be read into the tax treaties unless they are amended,” said Rakesh Nangia, managing partner, Nangia Anderson LLP. "Though the residents of treaty countries can claim the beneficial provisions of treaty, non-treaty jurisdictions and non-residents not eligible for treaty benefit, may have to review their position on taxability and compliances," he added.

The SEP provision was deferred till 2022-23 on grounds that a multilateral solution under OECD is being deliberated where all tax treaties will get amended automatically. Around 130 countries are striving to arrive at a consensus-based solution by mid of the year to tax digital entities that end up not paying taxes in countries from where they earn income as traditional taxation rules require a physical presence.

However, India has, in the meantime, expanded the scope of the equalisation levy over the last few years, to tax non-resident digital entities. While the levy applied only to digital advertising services till 2019-20 at the rate of 6 per cent, the government in April last year widened the scope to impose a 2 per cent tax on non-resident e-commerce players with a turnover of Rs 2 crore. The scope was further widened in the Finance Act 2021-22 through a clarification to cover e-commerce supply or service when any activity, including acceptance of the offer for sale, placing the purchase order, acceptance of the purchase order, supply of goods or provision of services, partly or wholly payment of consideration, takes place online.

Four years ago, India had revised its tax pacts with low or zero tax jurisdictions such as Mauritius, Singapore, and Cyprus gaining taxation rights over capital gains to plug loopholes.

SOCAR’s Petkim reveals profit in Q1 2021
SOCAR’s Petkim reveals profit in Q1 2021
Azerbaijan boosts steel imports from Turkey
Azerbaijan boosts steel imports from Turkey
Number of ships received at Turkish Gemlik port in 1Q2021 revealed
Number of ships received at Turkish Gemlik port in 1Q2021 revealed
Loading Bars
Latest
Winners of ‘Sustainable Development in Chemistry and Chemical Engineering’ conference awarded (PHOTO)
Very exciting to perform in Rhythmic Gymnastics FIG World Cup in Baku - Polish gymnast
Global Affairs Canada welcomes release of Armenian detainees by Azerbaijan
Azerbaijan's SME Dev't Agency holds training for female entrepreneurs (VIDEO)
Azerbaijani PulPal payment system receives purchase offer
Georgia begins renovating buildings and infrastructure in Gardabani
Azerbaijan eyes to launch WeChat payment solution
Azerbaijan's Central Bank unveils results of tender launched to support database platform
SOCAR’s Petkim reveals profit in Q1 2021
S.Korea to set up training center for advanced technologies of fruit, vegetable production in Uzbekistan
Oil prices set for weekly gain despite India virus surge
Azerbaijan boosts steel imports from Turkey
No 'Indian' strain of COVID-19 detected in Azerbaijan
Kazakhstan-China Pipeline LLP opens tender on repairs of pipelines
Uzbekistan, Ireland consider establishing co-op in tourism sector
Egyptian gymnast talks AGF's organization of World Cup in Baku
Nuvei acquires Israeli fintech co Simplex for $250m
SOCAR’s Petkim increases production capacity to 92%
Kazakhstan decreases imports of Belgium-made goods
Thailand expects up to 20 mln doses of Pfizer vaccine from July
Kazakhstan's inflation rate for April 2021 revealed
Shusha declared cultural capital of Azerbaijan - presidential order
Number of ships received at Turkish Gemlik port in 1Q2021 revealed
Putin instructs government to support international Arctic expedition
Kazakhstan’s Nostrum identifies measures to add to PDP reserves
Azerbaijan’s renewable energy path: ongoing and future projects
Georgia reports 1,547 new cases of coronavirus for May 7
Uzbekistan eyes attracting Singaporean companies for co-op in electrical industry
Turkey ratifies agreement on international combined transport of goods with Georgia
Kazakhstan boosts trade with Spain
Latest prices for Azerbaijani oil announced
Wide opportunities opening for TRACECA to implement major projects (PHOTO)
Azerbaijan establishes uninterrupted water supply to liberated Hadrut village
Construction of new main water pipeline to Shusha begins in Azerbaijan
Gold, silver prices increase in Azerbaijan
Size of hydrogen aircraft market by 2040 disclosed
Czech companies interested in implementing green energy projects in Uzbekistan
Azerbaijani Ro-Pax type ferry on its first voyage, en route to Kuryk port (PHOTO)
Kazakhstan’s freight transportation operator opens tender to test wheelsets
Countries Need To Assist India In Its Battle Against Second Wave Of Covid: Deloitte CEO
Cement adhesive and dry mortar mixes plant in Georgia expands with state support
WTO Patent Waiver Will Enable Timely Access Of Covid Vaccines: India
Russia promises to show its best at Expo 2020 in Dubai
Friendship between India and UAE increasing as their allies continues in pandemic
UK PM Johnson's party win election for parliament seat
First day of Rhythmic Gymnastics World Cup kicks off in Baku (PHOTO)
India taking steps for economy growth
Multilateral Response Is Critical To Overcome Pandemic In India, Globally: IMF
Indian defence organisations engaged in mitigating people’s sufferings amid Covid surge
India, EU likely to resume FTA talks stalled for 8 years
Bank of Israel bought $5.27b foreign currency in April
EURO 2020 Trophy presented to Azerbaijani President Ilham Aliyev (PHOTO)
Uzbekistan reveals COVID-19 data for May 7
Azerbaijan, TRACECA discuss regional opportunities of post-Karabakh conflict period
Azerbaijani currency rates for May 7
Organization of Azerbaijani Veterans appeals to Russian FM
IFC interested in supporting Azerbaijan’s energy transition
IFC supported Azerbaijan’s private sector with around $850 million, says director
IFC to engage in formulating new WB Partnership Framework for Azerbaijan - Director
Tesla tells regulator that full self-driving cars may not be achieved by year-end
India's daily COVID-19 cases rise by record 414,188
Azerbaijani president pays constant attention to work in liberated lands - administration (PHOTO)
Germany's exports up 2.6 pct in april
Brazil's COVID-19 cases surpass 15 million
Turkmenistan offers business opportunities for Swiss private sector in number of areas
Progress has been made in lifting JCPOA related sanctions - Head of Iranian President's office
Turkey, Brazil and US remain main exporters of poultry meat to Georgia
Turkey's central bank leaves key policy rate unchanged at 19%
Tajikistan official confirms the death of 19 citizens in the recent border clashes
GM posts strong performance in Q1
Bundestag approves easing of COVID-19 rules for immunized people
Diamond demand in China directly benefits Botswana: De Beers
U.S. weekly jobless claims drop to 498,000, marking new low during pandemic
WHO says COVID-19 vaccine supply hitches could reignite upticks in Africa
Food prices continue to climb in April - FAO
Turkey reports over 22 388 COVID-19 cases
At least 23 killed in Rio de Janeiro favela gun battle
Kyrgyzstan is interested in establishing joint Kyrgyz-Korean enterprises
Turkey's 1Q2021 revenues from car export to int'l market grow
We reject, don't recognize decision of Latvian gov't on so-called "Armenian genocide" - Turkish Defense Ministry
Georgia launches campaign to popularize state agricultural insurance program
New “Azerbaijan” Ro-Pax ship built in country’s shipyard to make its first voyage from Port of Baku (PHOTO/VİDEO)
Former Maldives president hurt in blast outside home
Turkey’s inactive COVID-19 vaccine makes it to WHO list
Saudi Arabia showing interest in importing Azerbaijan's AzGranata products
Araghchi arrives in Vienna to attend 4th round of JCPOA talks
Kazakhstan - Greece trade down y-o-y
Georgian banks see profit in 1Q2021
Azerbaijan’s Azerishig company opens tender to buy various combined, storage accessories
Uzbek TPP to use German equipment for energy production
Azerbaijani national team holds podium training for upcoming Rhythmic Gymnastics World Cup in Baku (VIDEO)
International Bank of Azerbaijan opens tender to buy Cisco network switches
Kazakhstan, Russia lift mutual restrictions on import, transit of livestock products
World auto concerns’ production volume to decrease during 6M2021
OSCE Chairperson-in-Office welcomes release of Armenian detainees by Azerbaijan
Greece decreases petroleum oil exports from Kazakhstan
Sputnik Light vaccine can be used for people aged 18-60
Moderna booster increases antibodies against COVID-19 variants, early data shows
Azerbaijan names amount of subsidies paid out for cropping
Yerevan ready to exert all efforts to fulfill trilateral agreements on Karabakh - acting PM of Armenia
All news