MUMBAI: A budgetary proposal to tax multinationals with a substantial user base in India such as Google and Facebook is now being widened to include non-digital companies.
This could mean that any company that merely sells goods or services in India could see domestic taxes of up to 42% on their profits, said two people with direct knowledge of the matter.
The government is planning to introduce rules to effect the change proposed in the budget in the coming weeks, said one of the persons quoted above.
Many tax experts fear this could impact several multinational companies that only export goods or services to India.
“The question is whether there is a tax to do business with India. If non-digital companies that merely trade with India could see their business connection/permanent establishment set in India slapped with domestic taxes, this could lead to unsettling of settled tax positions,” said , partner, Ashok Maheshwary & Associates LLP.
According to another person with direct knowledge of the matter, the impact on non-digital companies is unintentional.