Non-resident technology firms with revenue threshold of Rs 2 crore and a limit of 300,000 users will have to pay digital tax in India under the new or revised bilateral tax pacts.
This is part of the Significant Economic Presence (SEP) principle, which was introduced in the Finance Bill 2018-19. However, the existing double taxation avoidance agreements will not be covered under the proposed change, implying that in order to tax Facebook, Google and the like, India will require to renegotiate the tax treaty with the United States.