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‘Google Tax’ prompts Apple to raise App Store prices

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Apple will increase prices of applications on its App Store in the country,by upto 33 percent,with the government introducing a 14.5 percent service tax and the falling value of the rupee.
An app costing $0.99 (aboutRs.68)on the App Store in the US will now cost Rs.80 in India as opposed to Rs.60 earlier.The move is part of a global change in prices of apps, an exercise Apple engages in periodically.

Apple communicated the changes in pricing to developers and was reported by digital media outlet Mac Rumors.

The government introduced a service tax of 14 percent and levy of 0.5percent from December1 last year on all services sold digitally.This equalisation levy was introduced as part of a global move by nations to tax digital goods sold from outside a country.It is now popularly known as “GoogleTax”.

“Price tiers on the App Store are set internationally on the basis of several factors, including currency exchange rates,business practices,taxes,and the cost of doing business.These factors vary from region to region and over time,” said an Apple spokes person in response to queries from Business Standard .The increase in prices of its apps comesata time when Apple is looking at a slice of the price-sensitive Indian market,where its global rival Google dominates the smartphone segment. Apple currently controls just three percentoftheIndian smartphonemarket.

Apple is looking to manufacture its iPhones locally in order to save on taxes and bring down the cost of its devices.The company is lookingtopartnerwithFoxconn andWistrontomakedevices inIndiaatproposedfacilities in Bengaluru, Ahmedabad andGurugram.

So far the company’s attempts tosway the Indian government to extend further so psforit to set up manufacturing plants in India has been met with resistance.

Further,Apple also plans to open its own stores in India,for which it has sought a waiver of the 30percent local sourcing norms for single brand retail.The company is looking to reach a wider set of buyers by owning and controlling the buying experience of its devices in India,a tactic that worked for it in China.

The government introduced a service tax of 14% and levy of 0.5% from December 1 last year on all services sold digitally
Business Standard New Delhi,18th January 2017

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