This is to inform you that as per the Notification No. 37/2016: F.No. 370142/12/2016-TPL dated 27 May 2016 read with Finance Act, 2016, Government of India has levied an ‘Equalisation Levy’ on provision of online advertisement services or any other service or facility for the purpose of online advertisement by a Foreign Company provided on or after June 1, 2016 to specified customers in India. The applicable rate of the levy is 6% of value of fees for providing online advertisement or related services.
As you are aware, the terms and conditions applicable to AdWords require customers to bear any tax or Government charges on the services availed of by them.
Accordingly, with respect to invoices raised by Google for online advertisement and service for the purpose of online advertisement provided on or after 1 June 2016, you will need to deposit 6% Equalisation Levy (as applicable).
The Google Payments Team
Source- Email from Google
As per the Notification No. 37/ 2016: F.No. 370142/12/2016-TPL dated 27 May 2016 read with Finance Act, 2016, Government of India has levied an ‘Equalisation Levy’ on provision of online advertisement services or any other service or facility for the purpose of online advertisement provided on or after 1 June 2016 by a Foreign Company to specified customers in India.
This levy is not applicable to use of the Ad Words Program and payment for digital advertising services to Google India Private Limited (Indian Company).
But this tax won’t be applicable if service receiver has agreement with Google India Private Limited (Indian entity) in other words provision of this chapter (Chapter VIII of FA,2016) only applicable when agreement is with Google Asia Pacific Pte. Ltd. (a Singapore based entity) then only service receiver has to pay equalisation levy on payment made .