You can call it just a co-incident or probably the ill-fated post-discussion effect between Telecom minister Kapil Sibel and Google, held recently. Income Tax Department of India has imposed a notice on Google India – an Indian regulatory of Google- accusing of not showing up correct revenue figures. IT department has claimed that Google is making significant revenue from its Adwords program which serves to thousands of Indian advertisers but company has not revealed the correct figures only to make illegitimate profit by saving taxes.
According to the tax office, “Google India Pvt. Ltd. has not offered its entire income for taxation and the profit and loss account filed by the company “does not give complete picture of the businesses”.
Income tax department has questioned Google India’s about its net income from ads. Indian tax department officers have built the case on the basis of contract between Google India and Google Ireland. As we all know, Google India is making whooping revenue from AdWords programme and is crediting a sizable amount as distribution fees into its Ireland account. But Indian tax law states that if any firm is crediting cash in its own account then it will be declared as a separate entity and the respective company will have to show its full income to tax department as said by a person who is aware of tax assessment order which was served to Google India this week.
In the assessment it was mentioned that Google India has shown its revenue as Rs. 7.49 crore for 2008-09, but the correct value was 167.32 crore. As per the tax department, Google India will have to pay Rs. 74 crore to Indian Tax dept. for the year.
But few major questions arise here, if such things happened in 2008-09 then why government or tax authority was silent for such a long period? Why it has given notice to Google India exactly at the time when Google is sitting for a hot discussion with another government representative? It may be just a co-incident that Google received this notice exactly at the time when company has refused to respect Mr. Kapil sibel request ‘ASIS’ on content filtration. However, possibilities can’t be ruled out that the act is completely influenced personally or politically.
This is not just first case of its type. Government had been criticized over similar issue when it slapped tax notice to few RTI people, engaged with other controversial discussion with government. That’s why the Google India tax notice is also being considered as ill-fated attempt to play down Google’s stand against government request over content banning.
According to ET, “The firm is learnt to have told the department that there is “no omission in accounting of the revenue” and the transaction with Google Ireland is at arm’s length and adequate documentation has been maintained to substantiate this. ”
Statement directly highlights that Google India has made all the formalities and the chance of error is less because it’s a firm whose business mainly run on credibility and market reputation.
“There has been a need for advertisers to advertise their services so that they appear on the first or second page of the specified search result page. This increases the chances of the advertiser to be seen in the crowded market. In almost all these cases, it is seen that both advertiser as well as the service receiver are based out of India. To this extent, the entire or at least a substantially large portion of the revenue is generated in India only”, said by assessing officer.
Undoubtedly, Google is engaged in a controversial discussion with government over content filtration and blocking which can make its position little awkward. Being as a global brand, Google will have to deal with the situation to avoid damages its credit-ability and reputation in the market it’s known for.