BENGALURU: Google India has remitted over $2 billion from the revenue earned in the country over the past five financial years to the US-based search giant’s subsidiaries in Singapore and Ireland, an analysis of the company’s financial statements by ET shows.The amount, which is categorised as an expense towards “purchase of advertising space”, could further increase the company’s tax liability in the country, even as a dispute with Indian authorities — over the tax outlay on earlier transfers — continues to be heard in court.Google India has remitted a total of Rs 16,119.6 crore ($2.18 billion) towards “purchase of advertising space”, which is the biggest cost item in its P&L statement under “Miscellaneous expenses” for the period 2013-14 to 2017-18, as per regulatory filings made with the Registrar of Companies.The transfers amount to 50-60% of the company’s total revenue in India over the five-year period. Tax authorities in India have contended that such transfers are not cost or transfer of profit, but ‘royalty’, which is subject to tax.In October 2017, the Income-Tax Appellate Tribunal (ITAT) in Bengaluru ruled in favour of the taxmen. The verdict was reiterated in May this year by ITAT ITAT’s October 2017 ruling for the assessment years 2007-08 to 2012-13 directed Google India to pay tax on Rs 1,457 crore — the total amount that it had remitted to Google Ireland during that period.Google India appealed against the ruling in the Karnataka High Court , following which it won an interim stay. The next hearing is scheduled for later this month.A tax official told ET on condition of anonymity, “Google India will be liable to pay tax on the transfers until 2016, when an indirect tax in the form of equalisation levy was introduced. (Therefore) from FY17, when the equalisation levy (was introduced), they don’t have to pay withholding tax on royalty.”The equalisation levy is a 6% upfront tax that advertisers have to pay to digital service providers, and is also known as ‘Google tax’.This would mean that in addition to the tax on Rs 1,457 crore — the amount transferred between 2007-08 and 2012-13 — Google may have to also pay tax on the Rs 7,546 crore transferred for “purchase of advertising space” between 2013-14 and 2015-16, an analysis of its financial statements reveals.However, for the period after FY17, when the equalisation levy was introduced, there may be no further tax charged on “royalty”, said tax officials.“Equalisation levy is an indirect tax and is part of the Finance Bill. If they (Google) have taken the benefit of equalisation levy, then they don’t have to pay any other withholding tax under law,” said the official cited above.Even during the ITAT hearing in Bengaluru earlier this year, Google India had contested the tax levied saying that it is already being charged due to the equalisation levy.But the tax department had argued that the “equalisation levy does not determine the classification of payment between royalty and business income. Equalisation levy is only a charge on the payment made towards digital advertisement space by the advertisers”.In an email reply to ET’s queries, a representative for Google said, “We comply with all tax laws in India and pay all applicable taxes. The ITAT order was a clear departure from previous judgements on the issues and not in line with India’s double taxation avoidance agreement. We continue to represent the facts of the case at the high court as the ITAT ruling is based on an inaccurate representation of our business operations in India.”The key element of the relationship between Google India and Google Ireland is the ‘AdWords’ programme — a product through which an advertiser is able to publish advertisements on the Google website.“Under this AdWords Agreement and the Service Agreement, the assessee (Google India) was given licence to use confidential information, technical knowhow, trademark, brand features, derivative works, etc,” the tax department said during the proceedings at ITAT in Bengaluru.Payments made to Google Ireland are “not the payment simpliciter towards the purchase of AdWords space which may be treated as business profit in the hands of the recipient but it is a payment of royalty”, the tax department said at the hearing.Google India contests this stand by tax authorities and claims there is no transfer of technical knowhow, trademark or intellectual property rights.According to the search giant, Google India is the “non-exclusive authorised distributor of AdWords programme to the advertisers in India” and sees its role as “advertisement agency”, facilitating a transaction between a brand and a newspaper.Experts are of the view that India should learn from the UK and tax a proportion of all the revenue earned in the country by multinational technology companies.“It should not allow Google or any other company to get away with this,” said Harvard Law School distinguished fellow Vivek Wadhwa.“These tech companies are the richest in the world, take advantage of infrastructure and platforms created by governments all over the world, and do little by way of CSR (corporate social responsibility). And then they do everything they can to avoid paying taxes,” he said.In FY18, Google India reported a 30% increase in revenues at Rs 9,337.7 crore with profit after tax rising 33% to Rs 407.2 crore. The amount transferred for “purchase of advertising space” rose 36% to Rs 4,949.6 crore.Other major expenses for Google India include salary and wages, which increased by 91% in the five-year period to Rs 658 crore, while advertising and promotion spends rose fivefold to Rs 696 crore.During the same five-year period, Google India’s profit margin remained steady at 4-5%. On the other hand, Google’s parent Alphabet had an average quarterly profit margin of 19.85% for the past five years, with a maximum and minimum range of 30.18% and negative 9.34% during the period, respectively, according to data from investment research platform YCharts.