Subscribe for notification

Digital Tax in India: 2% Equalisation levy

Introduced in the Finance Act 2016, an “equalisation levy” at the rate of 6% (on the nonresident companies indulged in the digital advertisement space) sought to address the tax-related challenges by the growing digitization of the Indian economy. Effective from 1 April 2020, the scope has been widened to cover the levy of 2% on consideration received by Ecommerce operators from Ecommerce supply or services.

The provisions of equalisation levy are not a part of the income-tax law which means that the tax treaty benefits may not be available in relation to such levy.

Applicable to:
Applicable on non-resident Ecommerce operators who own, operate or manages a digital or electronic facility or platform for the sale of goods or provision of services (or both) via an online medium.

Applicable on:
The levy is applicable on Ecommerce supply or services including –

  • Online sale of goods owned by the e-commerce operator.
  • Online provision of services provided by the e-commerce operator.
  • Online sale of goods facilitated by the e-commerce operator (via a platform for others to supply goods or services).
  • Any combination of the above.

Applicable when:
The levy will be applicable when the goods or services are facilitated to either a resident in India or to a person using an IP address located in India or to a non-resident (in respect of the sale of advertisements focussed at residents in India or using an IP address of/in India).

Exclusions:
The equalisation levy shall not be charged when-

  • The e-commerce operator has a permanent establishment in India and the e-commerce supply or services are effectively connected with such permanent establishment.
  • The equalisation levy is leviable on an online advertisement and related activities; or
  • The sales, turnover or the gross receipts of the e-commerce operator is less than Rs. 2 crores (INR 20 million) during the financial year.

Recent Posts

  • Blog

EGovernance international best cases

Germany offers the public employment service that places people in the labor world every year… Read More

3 weeks ago
  • Blog

The billion-dollar quantum gold rush

Private investors had funded at least 52 quantum-technology companies globally since 2012, many of them… Read More

4 weeks ago
  • Blog

The Machine Justice: Rise of China’s Internet Courts

Within one year from its establishment (from August 2017 to August 2018), the Court accepted… Read More

1 month ago