Earlier this year, Finance Minister of India, Arun Jaitely announced in the budget that the government will impose tax on online and mobile advertising and today, it has come into effect with Google Adwords making changes in the tax policies for its Indian users.

Google have sent out an email to all its Google Adwords users in India about the recent update in its taxation policies. According to the email, Google will charge additional 12.36 percent service tax on all its transactions on or after October 1, 2014. Earlier there was no additional tax on Google Adwords program.

This is certainly a big blow to everyone who’s been using Google Adwords program for their online marketing campaigns because this change in the policy will certainly increase the cost.

Here’s what is written in the email.

Dear advertiser,

Your tax rate is changing for invoices dated on or after October 1, 2014. The rate will be changed from the current rate of 0% (zero percent) to 12.36% (inclusive of Education Cess and Secondary & Higher Education Cess).

This change is due to section 114 (B) of the Finance Act (No.2) Act, 2014, which received Presidential assent on 06th August 2014 read with Notification No. 18/ 2014 – Service Tax dated 25th August 2014 issued by Ministry of Finance, Government of India. Sale on online advertisement space is no longer in the negative list category effective 01 Oct 2014.

Please note that Google cannot advise you on tax matters. We recommend that you contact your tax adviser for any questions regarding this change.

This service announcement is sent to all advertisers (active as well as inactive) in India and doesn’t affect your account status or activity.

The Google AdWords team

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