Google to Challenge Indian Income Tax Tribunal Order to Pay Taxes

A tax appellate authority in India has upheld the tax demand from the multinational American tech giant Google. The tribunal has said that the country has the right to demand taxes from Google for the online titan’s remittances of advertisement revenue abroad.

New Delhi (Sputnik) — The Income Tax Appellate Tribunal (ITAT) heard a case dealing with the "characterization" of the payment made by Google India to Google Ireland Ltd with respect of the purchase of advertisement space for resale to advertisers in India under the Google Adwords program distribution agreements.

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Google India in a press communique has said that it will challenge the ruling of the ITAT in the High Court.

The dispute relates to the 2012-13 fiscal year when the tax department unearthed a transaction worth INR 1114.91 crore rupees (approx. $172 million) between Google India and Google Ireland. It was claimed by the tax department that Google India had credited the funds to Google Ireland Ltd (GIL) without deducting taxes in India. It issued a tax demand of Rs 258.84 crore ($39.8 million) to Google after the finding.

"We comply with all tax laws in India and pay all applicable taxes. We will file an appeal in the High Court as this ruling is an inaccurate representation of our business operations in India. The order is also a clear departure from previous judgments on the issues and is not in line with India's double taxation avoidance agreement," a Google communique said.

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An online branding expert said that the Google Adwords case and the future course of the matter will impact the future of online advertising in India. 

"We are keeping a keen watch on the development. The branding and Online Communication community along with our clients are anxious as the decision in the case will have an impact on the prices as well as practice of multinational giants in India. It will also impact the entry of new players in the field. We can just say, its an interesting time," Shadab Khan, Director LCS Infotech, a leading online advertising and tech consultant in India told Sputnik.