Equalization Levy Makes App Purchase Costlier On Apple, Google

Mobile applications bought on the Apple and Google platforms could get costlier as the government is planning to bring app purchase under the ambit of the ‘equalization levy.’ According to the report published in Economic Times, the government is looking to include Apps purchase under the levy by the end of December. The government is expected to issue guidelines by December, the report stated.

An equalization levy of about 6 percent is currently applicable on online advertisements on multinationals registered outside India. The impact of the levy on app prices may be as much as 7-8 percent, the report stated. The levy, a tax on cross-border digital transactions, will next be applied on mobile applications bought from companies such as Apple and Google. Other digital transactions could be brought under its purview at a later stage.

Last month, India introduced the ‘equalization levy’ – which imposes a six per cent tax on digital advertisements on international companies like Facebook and Google that provide digital ads to Indian businesses. International companies are widely expected to pass on the additional costs to Indian consumers, who already pay service tax, which in turn make e-commerce purchases more expensive.

According to the ET report, other digital transactions may eventually be brought into the fold of the equalisation levy. The ‘equalization levy’, which is aimed at taxing the digital economy, are also expected to hit other e-commerce transactions and startups, who primarily use digital advertising for marketing purposes.

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