TDS on payment to Google Singapore for Google workspace, G Suite services

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CA Ankit jain (Querist)
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20 April 2024 What should be rate of TDS on payment made to Google Singapore for Google workspace, Google suite services. Whether TDS will be applicable, if yes under section 195 or subject to equilisation levy

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 When making payments to Google Singapore (or any non-resident entity) for services like Google Workspace or Google Suite, the tax implications in India are typically as follows:

1. **Tax Deduction at Source (TDS) under Section 195:**
- Section 195 of the Income Tax Act, 1961 applies when a payment is made to a non-resident which is chargeable to tax in India. This includes payments for services rendered outside India by a non-resident.
- For payments to Google Singapore for services provided outside India, TDS would be applicable under Section 195.
- The rate of TDS under Section 195 is typically 10% of the gross amount of the payment, unless reduced under the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore.

2. **Equalisation Levy:**
- Apart from TDS under Section 195, India also has an Equalisation Levy (EL) which is applicable at a specified rate on consideration received or receivable for specified services provided by non-residents to residents in India.
- Services covered under Equalisation Levy include online advertisement, provision for digital advertising space, and other services as notified.
- As of my last update, Google Suite or Google Workspace services were not explicitly covered under Equalisation Levy unless they were bundled with online advertisement services.

**Determining Applicability:**
- **TDS under Section 195:** Generally applies to payments for services provided by a non-resident outside India. The rate is 10%, subject to reduction under DTAA if applicable.
- **Equalisation Levy:** Applies to specified services and could potentially apply to online advertising services provided by Google. However, for Google Suite or Google Workspace services themselves, the applicability of Equalisation Levy needs to be checked based on the latest notifications and amendments.

**Conclusion:**
- For payments to Google Singapore for Google Workspace or Google Suite services (excluding online advertising), TDS under Section 195 is typically applicable at a rate of 10%, subject to DTAA benefits.
- Equalisation Levy may apply depending on whether the services are considered as online advertising services under the relevant provisions of the Finance Act.

It's recommended to consult with a tax advisor or chartered accountant who can provide specific guidance considering the latest updates and notifications related to Equalisation Levy and TDS provisions applicable to your transactions with Google Singapore.