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When Google goes wrong?

I’ve always hated the tax complications India has had and loved countries like Singapore and hongkong for there simple tax laws.

So, with the confusing situation the taxman has put us in, who goes wrong? Google India, Yes thats right, Google India, but what confused them was a very simple Service Tax rate revision 😉

What I would imagine is multiple Tax specialists working at Google to make sure everything is compliant, but to my surprise they got the very basic rate wrong, Just checked the Invoice they raised us for April (Pre-paid Account) and then checked with a friend for a Post-Paid Account. Check Screenshot.

How is the world they charge 7.2% CESS?

So how much money did they lose with this small mistake?

Assuming a conservative Annual Sales figure @ 600 crores for Google India, there Sales estimate for the period 1st April – 15th May = 75 crores.

Service Tax @ 12.36 = 9.27 cr

Incorrect Tax @ 10.30 = 7.72 cr

Penalty Google has to pay from its pocket is about one and a half crore.

It may seem a big mistake for a simple rate change but considering Google sits on a Cash of about $ 47 Billion, nah, nevermind, not a big amount, they wont mind paying a few crores for that 😉

Anyways, considering how complex the Indian Financial system can be, let me know if I got something wrong.

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  1. 7.2% – it’s a mistake. 

    Tax laws – they are complicated in most of the developed countries. Germany, UK, USA. Singapore and HK can’t afford to have complicated tax laws. Their economy is totally dependent on foreign investment and exports. To survive they need a very business-friendly environment. No wonder they both also top the ‘easy of setting up business’ indices.

  2. Recently heard a good thing though!

     https://www.simpletaxindia.net/2012/03/negative-list-of-17-sweet.html

    Online Advertising will be free from Service Tax, Soon Google will remove the service tax all together. 

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