GST Compliance Push Hits Global Digital Companies like Facebook and Google: Central Govt Expects Rs. 2000 crore Revenue Boost

The Goods and Services Tax (GST) authorities in India have taken proactive steps to make sure that foreign businesses, some of which are well-known leaders in their respective industries like Facebook, Google, Netflix, and Spotify, strictly adhere to the most recent GST legislation.

About 70 digital firms spanning a wide range of industries have received formal notices as a result of these regulatory proceedings. These businesses operate across the entire spectrum of the digital economy, including online gaming companies, ad agencies, and educational technology (edtech) suppliers; reported Business Standard.

These notices are primarily intended to align these international firms with the revised specifications, which now call for an 18 percent Integrated GST (IGST) rate. Notably, this newly implemented tax rate, which became effective on October 1, applies to all digital services delivered, whether they are used for business or personal use.

The Indian government predicts a significant increase in tax collection for the current fiscal year, or F.Y. 2023–24, as a result of these crucial regulatory changes. In contrast to the about 700 crore that was collected in the previous fiscal year, F.Y. 2022-23, from foreign enterprises involved in providing a wide range of digital services within India, the government has set its eyes on collecting an estimated 2,000 crore in income.

According to the source, online gaming and advertising firms, along with smaller subscription-based enterprises, constitute a notable subset of entities undergoing increased scrutiny. The introduction of these newly established norms serves the primary purpose of reinforcing compliance when foreign entities render services to the Indian user base. This strategic move aims to bolster the overall integrity of the tax framework within the digital sphere, ensuring that all participants in the digital economy contribute fairly to the tax system.

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