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May 25, 2020
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Govt should keep in abeyance equalisation levy on non-resident e-commerce companies: Experts
The government should consider keeping in abeyance the 2 per cent equalisation levy on e-commerce companies as there are ambiguities surrounding its applicability, tax experts said.
Budget 2020-21, presented in February, expanded the scope of “equalisation levy” to include consideration received by e-commerce operators from e-commerce supply or services.
The 2 per cent levy came into effect from April 1, 2020.
Nangia Andersen Consulting Chairman Rakesh Nangia said the first instalment of equalisation levy would be payable in July 2020, but unsorted aspects such as double whammy caused on account of Section 10 (50) of the Income Tax Act, meaning and scope of consideration received or receivable, tax registrations and compliances may create hardship to the non-resident taxpayers.
“The provisions of equalisation levy, as notified, has left lot of ambiguities in terms of its application and procedures. Added to this is the business turmoil on account of COVID-19.
“In the best interest of business, the ideal approach should be to keep applicability of equalisation provisions in abeyance until issuance of necessary clarifications,” Nangia said.
Last month, a group of nine business bodies,representing mostly American, European, Australian and Asian foreign companies, had written to Finance Minister Nirmala Sitharaman seeking deferment of 2 per cent tax imposed on non-resident e-commerce companies by nine months due to the crisis triggered by COVID-19.
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