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App store to become more expensive in India due to New Tax

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Apple has announced that the cost of apps in-app purchases on the App store will increase in India and at least five other countries. The countries in which apps purchase prices will increase are Brazil, Colombia, Indonesia, Russia and South Africa. As per the details, the increase in the App Store app prices in India will reflect the new equalization levy. It will add 2 per cent more to existing goods and services tax of 18 per cent.

Apple issued a statement saying that they need to update prices on the App Store after taxes on foreign exchange change.

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Apple Products

The revenue accrued via digital transactions

An equalisation levy is a form of direct tax. The government introduced it in 2016 to tax foreign tech companies. It is applicable for revenue accrued via digital transactions. On April 1 this year, the New Finance Act 2020 came into effect. Under section 165A, the government had levied 2 per cent equalisation levy on e-commerce operators. In addition to that, Indonesia’s foreign developers will bear the burden of an additional 10 % tax, the company added.

Moreover, Apple said that the availability section of My Apps will be updated after changes are made. Also, they will adjust and calculate the proceeds based on tax exclusive.

Changes to go live in the next few days for Apple app store

The iPhone maker informed that it will implement the changes in the next few days. But this will not cover the apps with auto-renewable subscription. However, the company will allow the developers to change the price of their apps. Also, Apple will allow changes to prices of in-app purchases including auto-renewable subscriptions. Developers who offer subscriptions can choose to preserve the current prices for existing subscribers. However, it is unclear whether Apple’s own services in India will also witness a change in subscription rates. Apple currently offers Apple Music, Apple TV and iCloud in India.

Price charts of the revised pricing for Apple app store

To show the revised pricing for the particular apps, Apple has also provided developers with the fresh price tier charts. The pricing charts reflect that Apple would charge a minimum of Rs 89 on apps on the App Store. In 2017, the company had last updated App stores prices and the minimum price in apps was set at Rs 80 in India.

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