Social media giant Facebook has reported a 40 per cent jump in its profit for the fiscal year ended in March 2018. The major reason attributed to this steep jump is the increased adoption of social media amid reduced cost of data usage.
Notably, its total revenue surged 53 per cent in India which also represents the money it earned through Whatsapp. For the financial year 2018, the company's total revenue stood at Rs 521 crore as against Rs 407 crore in the same period a year ago.
The financial statement of the company also highlighted the several tax issues it is facing in India. As per the financial statement, Facebook is facing disputes related to income tax, VAT, sales tax, customs and excise and service tax.
However, the industry experts are of the opinion that the figures may not accurately reflect the company's earnings from the country. Amit Maheshwari, a partner at Ashok Maheshwary and Associates LLP, said: This may not accurately reflect the revenues of Facebook from India on account of online advertising."
The company in its financial statement has said that the numbers only represent services the India unit provides to the parent company based in the US. Facebook operates its Indian arm through a Singapore-registered company.
According to the Economic Times, the latest Magna 2019 forecast shows that digital advertising is expected to reach at a level of Rs 18,802.3 crore, from Rs 14,162.2 crore in 2018. Of total Indian digital advertising spend, Google and Facebook has more than 65 per cent share.
Interestingly, in last the two years, Facbook and Google have come under the tax department's lens. Recently, the central government had introduced equalisation levy colloquially known as Google tax though which it collects six per cent tax from the online major on their domestic advertising revenues.
Three major players — Google, Facebook and LinkedIn — contributes for the major part of the tax collection thorough equalization levy. The tax authorities in India adopt the principles from the multilateral Organisation for Economic Cooperation and Development (OECD) under BEPS (Base Erosion and Profit Shifting) to prevent tax evasion.