Facebook, Google, X, And Others May Have To Pay IGST Up To 18% From October 1: Report

Big tech giants including Facebook, X, Google, and several edtech firms can likely face integrated goods and services tax (IGST) up to 18% on services provided to the Indian government and individuals within the country.

According to a notification by the Central Board of Indirect Taxes and Customs, the services will no longer enjoy exemption from IGST.

On Wednesday, India proposed to end up to 18% IGST exemptions enjoyed by Overseas Online Information and Databases Access Retrieval Service or OIDAR services providers including Facebook, X, Google, and several other edtech companies on services provided to government and individuals from October One.

A Economic Times (ET) report cited one senior official saying, "This will cover overseas companies providing advertising, cloud services, music, subscription services, online education, and even information to all individuals and government irrespective of whether it is used for personal or business purpose."

The OIDAR services are defined as services provided through IT over the Internet. They include advertising on the internet, cloud services, sale of e-books, movies, music, and software, supply of digital content, data storage, and online gaming.

The official further said that the notification will also clear the ambiguity around the definition and laws of these services.

According to experts, while some large companies already saw it coming, several smaller companies and edtech firms will be the most impacted because of the increase in compliance.

In the Finance Act 2023, the government expanded the tax scope of OIDAR services and changed the definition by removing the reference to "involving minimal human intervention" in service delivery.