Equalisation levy on e-commerce operators [As introduced in Finance Act, 2020]

Scope of equalisation levy

The Finance Act, 2020 has extended the scope of Equalisation Levy to include consideration received or receivable for e-commerce supply or services made or facilitated by an e-commerce operator.

  • Applicable w.e.f. 01st April 2020
  • Rate of Equalisation levy: 2%
  • Covers supplies or services to following:
    • Person resident in India
    • Person who buys such goods or services or both using internet protocol address located in India
    • Non-resident – only in the following cases:
      • sale of advertisement, which targets a customer, who is resident in India or a customer who accesses the advertisement though internet protocol address located in India
      • sale of data, collected from a person who is resident in India or from a person who uses internet protocol address located in India.

Meaning of e-commerce operator

  • E-commerce operator means a non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or online provision of services or both.

Meaning of e-commerce supply or services

  • Online sale of goods owned by the e-commerce operator;
  • Online provision of services provided by the e-commerce operator;
  • Online sale of goods or provision of services or both facilitated by the e-commerce operator; or
  • Any combination of above activities

Exclusions

Equalisation levy shall not be charged if:

  • Non resident e-commerce operator has a permanent establishment in India
    • e-commerce supply or services is effectively connected with such permanent establishment
  • where the equalisation levy is leviable under the existing provisions of sum received or receivable from online advertisement services
  • sales, turnover or gross receipts of the e-commerce operator from the e-commerce supply or services is less than two crore rupees during the previous year

Compliances

  • Obligation to deposit the equalisation levy on the e-commerce operator
  • the equalisation levy in respect of online supply of goods and services shall be paid to the credit of central government on quarterly basis (by 7 days from the end of quarter, except for quarter ending March, wherein to be paid by 31st March.
  • Annual filing of statement- on or before 30th June of the financial year immediately following the financial year in which equalisation levy is chargeable
  • Interest for delay in deposit- 1% of such levy for every month or part of the month during which such failure continues
  • Penalty – 100% of default

Section 10(50) of the Income-tax Act provides that incomes in respect of which equalization levy has been charged shall be exempt from tax. Hence, no Income-tax would be charged on consideration received or receivable for specified services which are subject to such levy.

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