Google, Facebook and Edtech Companies May Have to Pay Up to 18% IGST

Google, Facebook and Edtech Companies May Have to Pay Up to 18% IGST

Overseas Online Information and Databases Access Retrieval Service or OIDAR services providers, such as Facebook, X, Google, and a large number of edtech companies, may have to pay an integrated goods and services tax (IGST) of up to 18% on services provided to the government and individuals in India. This proposed change comes as India plans to end the exemption currently enjoyed by these companies from IGST, starting from October One. The Central Board of Indirect Taxes and Customs issued a notification that states that overseas companies providing advertising services, among other OIDAR services, will no longer be exempted from IGST. This move aims to bring these services under the purview of taxation and ensure a level playing field for domestic service providers. The inclusion of OIDAR services within the scope of IGST will have implications for both overseas service providers and the Indian government. While companies like Facebook and Google will experience increased tax liabilities, the government expects to generate additional revenue from the taxation of these services. The impact of this proposed change will be felt not only by technology giants but also by the growing edtech sector in India. Many edtech companies rely on online platforms and overseas services for delivering their educational content and services. The imposition of IGST on these services could result in higher costs for both the companies and the end-users. As India increasingly digitizes its economy, it is important to address the taxation of digital services provided by overseas companies. This move towards taxing OIDAR services aligns with global trends where many countries have implemented similar measures to ensure that digital service providers are subject to appropriate taxation. The proposed change in India’s tax policy reflects the government’s efforts to boost revenue collection and create a level playing field for both domestic and overseas service providers in the digital space. However, it remains to be seen how these changes will be implemented and what impact they will have on the business operations of OIDAR services providers in India.

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