The government may include firms working beyond the digital space under the proposed plans to tax multinationals with sizable Indian presence, reported The Economic Times.

Share Market Live

NSE

As per the report, the budgetary plans initially meant for firms such as Google and Facebook may now be implemented on any company operating in the country. And according to sources, these companies may now see domestic tax of up to 42% on their profits.

Some, however fear that the new tax, likely to be introduced soon will hit hard companies that only export goods or services. “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,” Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP was quoted saying in the report.

On the other hand the report also quoted people who supported the plan and though it was just to tax firms earning millions from India. “Why should companies that earn billions from India or have potential to do so be not taxed in the country,” said a person quoted in the report.

Many experts opined that India could be looking to introduce the new tax system even for the existing tax treaties with other countries, the report said.

“The consultative process should result in a model that could apply to the digital economy but is not misused in the brick and mortar businesses. Drafting of the rules must be water tight so that the rules don’t get misused and any company that merely trades with India doesn’t get burdened with tax at 42% on net profit method,” Vijay Iyer, national leader, transfer pricing, EY India was quoted saying in the report.

First Published:May 8, 2018 10:00 AM IST