July 31 (AZINS) The government is considering to levy taxes on the world's top tech companies like Facebook, Google and Twitter on profits earned locally. 

The Narendra Modi government is reportedly planning to set an annual threshold of revenue Rs 20 crore and a maximum limit of 5 lakh subscribers above which the non-resident tech companies will have to pay taxes.

This new way of earning revenue for the government is a part of 'Significant Economic Presence' (SEP) concept which was proposed in the 2018 Union Budget. 

This concept was introduced through the Finance Act, 2018. 

SEP is a concept where any transaction in respect of any goods, services or property carried out by a non-resident in India which includes provision of download of data or software, if the aggregate of payments arising from such transactions during the previous year exceeds the amount as may be prescribed.

It is alleged that these digital companies pay very less tax to the government despite earning high profits by offering online advertisements to Indian customers.

The government had last year said that the introduction of SEP is expected to boost the country's tax collection as it will help to widen the tax base in India by establishing business connection and allowing them to charge the tax on income that the digital companies earn in India, with whom the country has not entered into a Double Taxation Avoidance Agreement (DTAA).