The Income Tax Department of India has reportedly issued a tax demand notice to Amazon Web Services (AWS) for a whopping 549 crore. According to a report by the Economic Times, the notice was sent based on the findings that AWS was imposing a fee for offering cloud computing services to Indian entities.
The tax department has argued that the receipts from cloud computing services were like royalties and fees for technical services (FTS) and hence chargeable to tax in India. This development comes amid a crackdown on foreign firms that allegedly avoid paying taxes in India.
The tax department has invoked Section 147 of the Income-tax Act and raised a tax demand of 190.85 crores for FY15 and 358.27 crores for FY17. The I-T sleuths sent a final notice to AWS in the last week of January.
The move is part of the Indian government’s broader crackdown on digital giants, who have long been accused of evading taxes by routing their profits through tax havens. The government has been making efforts to create a level playing field for domestic companies and foreign firms operating in India.
It is worth noting that this is not the first time that AWS has faced scrutiny from Indian tax authorities. In 2018, AWS was reportedly under investigation for possible tax evasion. The company was accused of evading taxes by classifying its income as software development rather than business income.
The Indian government’s crackdown on digital giants is part of a global trend, with countries around the world trying to ensure that multinational companies pay their fair share of taxes. In recent years, there has been growing pressure on digital giants like Google, Amazon, and Facebook to pay more taxes in the countries where they operate.
In conclusion, the Income Tax Department’s tax demand notice to AWS is a big step in India’s ongoing efforts to make sure that multinational companies that do business in the country pay their fair share of taxes. The move is likely to have big effects on other digital giants that do business in India, and it could set a precedent for similar moves in the future.
