Google India gets Income Tax notice

Google IndiaGoogle, the global search engine giant is facing the heat from the Indian Telecom Ministry and the Income-Tax Department at the same time. The Telecom Minister Kapil Sibal has come down with an iron hand on the regulation of content by Google and its services and in addition to this, the recent notice served by the Income –Tax Department towards giving final touches to a tax demand from Google India seems to have put the company in a tight spot.

The Government of India has requested Google to remove around 358 items off its services including YouTube and Orkut during the period of January-June 2011, the Google Transparency Report stated. The report declared that the removal requests for the deletion of as many as 255 items allude to the government criticisms. The government had requested Google to remove the around 236 items from Orkut and 19 items from YouTube on similar grounds. According to the report, the other reasons that have been furnished for the removal of particular content include defamation (39 requests), privacy and security (20 requests), impersonation (14 requests), hate speech (8 requests), pornography (3 requests) and national security (1 request).

The internet search giant has confirmed that it has partially or fully complied with almost 51 percent of the requests that were tendered.

It is interesting to note that the greater part of these requests were for removal of 236 communities and profiles from Orkut (the social networking site of Google) which were considered as critical of local politician and that these requests were from a local law enforcement agency. The report said that Google did not comply with this request as the content did not violate their community Standards or local law.

India is the one among the four countries which has requested removal of content to Google on reasons of the content being critical of the government. The other countries which made the request are Thailand, Turkey and the United States. In Thailand and Turkey, Google restricted local users from accessing the infracting content although in United States it turned down the requests.

The same time when Google has been facing the heat from the Telecom Ministry to remove certain content, the Income-Tax Department has also served a notice to Google as Google India Pvt. Ltd., the Indian subsidiary of the internet search engine giant, for its failure to offer its entire income for taxation. According to the Income-Tax Department, the profit and loss account filed by the company does not give a complete picture of the business. The Department had also called into question the practice of the Google India of paying the tax on its ‘net’ income from advertisements, after crediting a sizeable amount as distribution fees to Google Ireland. The advertisements that appear on the Google website are sold in India to Indian business establishment through the ‘Adwords’ program run by the Indian arm of the global search engine company.

The tax authorities have based their arguments on the contract entered into by Google India with Google Ireland according to which Google India is carrying out the business and acquiring proceeds from Google Adwords program “on its own account”. As per the interpretation of the I-T department, this arrangement would make Google India a separate legal entity which is obliged to declare its full income for tax purposes.

Google has said to have told the department that there is no omission in accounting of revenue and that its dealings with Google Ireland are at arm’s length for which adequate documentation has been maintained.

The decision of the department is expected to be of great significance as it would be applicable for other search engines also.

Google faces the heat from the Telecom Ministry and Income-Tax Department

Cyber experts criticize governments move to censor the internet

Report by Radhalakshmi