SC gives relief to Google, Facebook & Other tech giants over royalty taxes

Google, Facebook & Amazon could start claiming hundreds of crores in refunds from Indian government, as Supreme Court ruling clarified that payments made by local users for the purchase of software from non-resident sellers or distributors cannot be taxed as royalty.

India charges a 10% royalty tax, but the SC ruling means a non-resident foreign software seller without a permanent establishment in India would not have to deduct the royalty tax at the source. Instead, sellers and other software providers would have to pay the 2% equalization levy, which was introduced in the Finance Act, 2020.