The compensation levy, also known as the “Google Fee”, the government requires income from online advertising by e-commerce companies not resident in India should damage the startups tax ecosystem according image credit: Gokul the rate, which is currently 6%, came into effect on June 1. If transferred to new companies, the applicable tax should be Nishith Desai, managing partner of Nishith Desai Associates said in Mumbai the fact that the rate was notified in addition to the taxes paid by a businessman of imported online services improperly increases the cost of business for new companies, which hinders innovation < / p> Internet and Mobile Association of India (IAMAI) and the law firm Nishith Desai Associates, small companies that focus on technology have not generally not enough capital to hire employees internally for all the necessary commercial activities. It can be assumed that many of the ancillary services required for the business Report functions, such as advertising, marketing, accounting, etc. They generally come from third-party online service providers. The newspaper also pointed out that emerging startups burn a lot of money. A couple of years to become profitable and if the tax is extended to many other digital services, it is expected that the burden multiply exponentially, which hinders the cost of innovation. In addition, experts believe that the rate could rise to eight percent from six percent today, with the scope, which could be exacerbated when GST is applicable, according to the report. See also: Government taxes cut in small traders digital transactions < p> The White Paper calls for a cap to be placed at least on the tax rate, and the number of services reported subject to the rate should not be extended until an impact study is undertaken by the government. .
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