May 14, 2020
Equalisation levy on e-commerce companies may be deferred to second half of FY 2020-21
The Finance Ministry is considering the deferment of the ‘Google Tax’ (technically known as equalisation levy) on e-commerce companies by up to six months during the current fiscal. This levy came into effect from April 1.
The Finance Ministry has received several representations seeking relief from this levy. “It is being contemplated to give certain relaxation to e-commerce companies,” a source told BusinessLine. Once decided, it would be in line with most income tax-related compliance timelines, the source said.
The levy, first introduced in 2016-17 and was applicable to payments for digital advertisement services received by non-resident companies without a permanent establishment (PE) here, if these exceeded ?1 lakh a year. Rate of tax for this purpose is 6 per cent. The companies using these services are required to withhold the tax amount.
In the 2020-21 Budget, the Government widened the ambit of the levy by including e-commerce companies. The applicable tax rate is two per cent (plus a surcharge) on amount of consideration received/receivable by an e-commerce operator.