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Social Networking sites Google Facebook under Scanner on tax due

The Delhi High Court Division Bench consisting of Justice BD Ahmed and Justice RV Easwar on Wednesday (20 Feb 2013) issued notices to the central ministries in relation to recovery of taxes arising from the business income generated from Indian operation of social networking sites like Google, Facebook.

These notices were issued in response to the Public interest litigation (PIL) filed by KN Govindacharya of the Rashtriya Swabhimaan Aandolan. The Court had earlier also sought response from Information Technology Ministry, Google India and Facebook India in respect of the recovery of taxes.

The Court on Wednesday sought response from the central ministries as to recovery of direct and indirect taxes generated from the Indian operation of sites. The Court asked the ministries to respond within six weeks and scheduled the matter for hearing on 9 April, 2013.

The Social Networking sites are earning large revenue on the account of its operation in India and these notices were issued in response to this. The petitioner prayed for the recovery of all past and present direct and indirect tax demands arising from business income generated from Indian operations. The petitioner also asked the court to issue directions for proper compliance to the Reserve bank of India guidelines.

The Petition also stated that the social networking sites should also ensure proper verification of the existing and future users so as to refrain access by kids who are below the age of 13.