The Income Tax Department on May 3, 2021 notified a revenue threshold of Rs 2 crore and a limit of 300,000 users for non-resident technology firms such as Google, Facebook, Netflix, to pay tax in India under new or revised bilateral tax pacts.
- This is part of the Significant Economic Presence (SEP) principle, which was introduced in the Finance Bill 2018-19.
- The SEP was defined to mean transaction in respect of any goods, services or property carried out by a non-resident in India, including the provision of download of data or software in India, subject to payment threshold to be prescribed; or systematic and continuous soliciting of business activities or engaging in interaction with such number of users as may be prescribed, in India through digital mean.
- This will come into effect from April 1, 2022.
- The digital companies will come under India’s tax net only when the existing treaties get reviewed or when new ones are signed.
