No rethink on Google tax, clarity on NRI tax residency once travel resumes: CBDT chief

The Central Board of Direct Taxes (CBDT) rejected the re-evaluation of the equalization tax levied on internet and e-commerce companies, commonly referred to as the Google tax.

In order to create a level playing field between Indian and foreign companies, a 2 percent equalization tax was applied to foreign internet companies in 2016.

CBDT, the country’s top tax authority, said residency rules for non-indigenous people (NRIs) stranded in India due to the pandemic in the current fiscal year will be clarified over time.

On the issue of equalization tax, CBDT President PC Mody told Business Today, “A lot of online transactions and e-commerce are taking place. It has been the subject of discussion in multilateral forums about what should be the rightful share of any tax jurisdiction. Tax this part of the work and how it should be done. India also took a lead on this issue and introduced the equalization tax, so I think it should be seen in this perspective.

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“No rethinking right now. We need to understand the basics. The way business is run has changed drastically as it used to. The pandemic only increased that,” Mody added. .

The US Trade Representative (USTR) said in a report that even a month before the Budget, India’s taxes on digital services are discriminatory against US companies.

As the budget approached, one of the key requests was a statement regarding the tax residency status of NRIs stuck in India in the current fiscal year. However, a decision on this has not been announced, as the tax office is expecting more clarity on travel restrictions.

“For the current financial year, travel restrictions and international travel have not yet been completely eliminated. When this happens, we will get a call on it. First we need to understand the problem and its impact. But then we still need to see how things are developing for the current financial period,” he said. Mody added.

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Regarding direct tax collection targets for 2021-22, Mody said the projections were “not realistic and ambitious”. Income taxes were pegged at Rs 5.61,000 crore for 2020-21 against Rs 4.59,000 in the revised estimate for the current fiscal year. The corporate tax collection is set at Rs 5.47,000 for 2021-22.

“We are confident in achieving the goal. I guess such changes in the tax administration will strengthen our hands in achieving the goals,” said Mody. Said.

Explaining the facilitation provided to taxpayers, Mody said, “Changes are brazen evaluation, penalties, and appeals. While filling the individual’s tax portal with details of earnings from the other third, there is ease of submitting one’s statements. Like parties, banks, and others. This is a kind of checklist for the assessed. We can edit and correct data shared by third parties and file returns accordingly. Essentially, we are trying to provide an impetus to voluntary compliance by creating an enabling environment. ”

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