Not Just Security, Data Localisation Could Help India Raise More Tax Revenue From Tech Firms, Says Report
Not Just Security, Data Localisation Could Help India Raise More Tax Revenue From Tech Firms, Says ReportRepresentative Image. (creative commons via Pixabay)

The Indian government has been pushing internet firms to set up data centres in India to store data of citizens exclusively in the country. However, it may prove to be a move not just aimed at ensuring privacy and security of citizens’s data, but a clever strategy to tax the likes such as Google and Facebook, reports Economic Times.

Currently many internet companies deliver services from outside India, thus putting them out of Indian tax jurisdiction.

“If any other Indian company would have done the same business online or offline they would have ended up paying a lot of taxes, so why to let them go,” said an official.

Thus, analysts note that if the companies were made to set up servers in India, they would treated as permanent establishments and would be taxed accordingly.

Earlier in 2016, the government introduced a 6 per cent equalisation levy, popularly known as Google tax on advertisers after realising that India is losing revenues from internet companies as they are billed outside the country. An amount of Rs 1,000 crore was collected from equalisation levy till March 2018, as per reports.

The government also proposed in Union Budget 2018-2019 to amend Income Tax act on internet giants with a sizeable share in the Indian market.

Experts however said that India continues to lose revenue from services such as annual or monthly subscriptions of streaming websites or paid promotions through the likes of Facebook.

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