Google and Facebook have come under scrutiny from the income tax department over under reporting of revenues from their India operations, as per a report in Business Standard.
The two companies aren’t subject to the 40 percent corporate tax charged paid by foreign companies. But such companies are needed to pay a withholding tax (or equalization levy) of 6 percent of their advertising revenues.
Moneycontrol could not independently verify the report.
Since India operations of these companies act as re sellers of their parent companies’ services, these revenues reported in India hasn’t reflected the actual advertisement revenues earned from users in India, an I-T official told the publication.
The I-T department is also investigating whether such service providers are deducting tax properly, the report added.
