With effect from 01 June 2016, the Indian Government as imposed an “Equalisation Levy” of 6% on online ads in platforms such as Google or Facebook, if the annual spend is more thanRs. 1 Lakh. The notification No 37/2016: F.No. 370142/12/2016-TPL was issued on 27 May 2016 to this effect. The rules of the Levy and required forms to deposit there are here, but I feel there is a lot of vagueness in it and I’m sure a few clarifications will come soon.
This will directly increase the cost of almost all forms of social media advertisements by 6%. Google has sent out this email today:
This is to inform you that as per the Notification No. 37/ 2016: F.No. 370142/12/2016-TPL dated 27 May 2016 read with Finance Act, 2016, Government of India has levied an ‘Equalisation Levy’ on provision of online advertisement services or any other service or facility for the purpose of online advertisement by a Foreign Company provided on or after June 1, 2016 to specified customers in India. The applicable rate of the levy is 6% of value of fees for providing online advertisement or related services.
As you are aware, the terms and conditions applicable to AdWords require customers to bear any tax or Government charges on the services availed of by them.
Accordingly, with respect to invoices raised by Google for online advertisement and service for the purpose of online advertisement provided on or after 1 June 2016, you will need to deposit 6% Equalisation Levy (as applicable).
The Google Payments Team
Just accounting for this Levy will require a lot of paperwork. The Levy itself will need to be deposited with different challans into banks,m each month. A separate statement of specified services used during a financial year will need to be filed before 30th June following the financial year and here’s Part B of the form that asks for information:
So much for “Ease of Doing Business”.