Indian Bureaucrats 1, Google 0

For 10 years now, the developers of the Internet have been ducking and weaving the sales tax issue. It has been creeping in, but large tracts of the Internet have remained free of the sticky and unwelcome fingers of politicians and bureaucrats. It's only a matter of time before they close in and India may be just prove to be the front line.

According to ContentSutra.com, Google India has just discovered the unquenched enthusiasm of the country's bureaucrats for collecting early and often, particularly if you look like a fat-pocketed foreigner. The sinister-sounding Authority for Advance Rulings has apparently decided Google "will have to pay service tax for selling advertisement space on its search site to Indian entities" the post says.

Like most such rulings, the potential for confusion is obvious. I quite agree with the writer, S. Karat who says "I would say it's too early to tax a fledgling advertising business. The business models are yet to be clear here, while the tax department seems to be in a hurry to tax ads on search engines. Does that include adsense and adwords too? I doubt if the tax department would be clear on that".