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Saturday, August 08, 2020

Equalisation levy: I-T dept amends tax challan to include non-resident e-commerce suppliers

Equalisation levy at 6% has been in force since 2016 on payment exceeding Rs 1 lakh a year to a non-resident service provider for online advertisements.

By: ENS Economic Bureau | New Delhi | Published: July 5, 2020 12:47:43 am
tax challans, non residenty e commerce companies, income tax department, e commerce companies tax, United States Trade Representative  The move comes after the United States Trade Representative (USTR) last month initiated investigations into taxes adopted or under consideration by 10 nations, including India, on revenues of US digital service companies like Netflix, Airbnb, Uber, LinkedIn and Spotify, and companies were seeking further clarification. (Image: Bloomberg)

Ahead of the first instalment payment deadline on July 7, the income tax department has brought in changes to the challan for paying the equalisation levy by expanding its scope to include non-resident e-commerce players supplying goods or services online.

The move comes after the United States Trade Representative (USTR) last month initiated investigations into taxes adopted or under consideration by 10 nations, including India, on revenues of US digital service companies like Netflix, Airbnb, Uber, LinkedIn and Spotify, and companies were seeking further clarification.

India — in amendments to the Finance Act, 2020 in March-end — had expanded the ambit of the equalisation levy for non-resident e-commerce operators involved in supply of services, including online sale of goods and provision of services, with the levy at the rate of 2 per cent effective April 1, 2020.

Equalisation levy at 6 per cent has been in force since 2016 on payment exceeding Rs 1 lakh a year to a non-resident service provider for online advertisements. This is now applicable for e-commerce companies that are sourcing revenue from Indian customers without having tangible presence here in the country.

The income tax department has modified challan ITNS 285 (relating to payment of equalisation levy) to enable payment of the first installment by non-resident e-commerce operators. The amended challan now adds “e-commerce operator for e-commerce supply or services” under ‘Type of Deductor’. The challan also seeks mandatory PAN of the deductor. Further, it provides for ‘Outside India’ option while seeking address details.

Nangia Andersen LLP partner Sandeep Jhunjhunwala said along with this modification in the payment challan, the Central Board of Direct Taxes has cleared the clouds on requirement of PAN by making it a mandatory tab in the challan. “This has rather imposed a burdensome and challenging task for non-resident e-commerce players to apply for and obtain Permanent Account Number within one business day in the midst of curbs, lockdown and pandemic affected business life and also organize the mode of payment through an Indian bank account or debit card issued by an Indian bank,” he said.

Non-resident digital companies were waiting for a detailed FAQ to get clarity on issues surrounding the equalisation levy.

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