While speaking at a post-Budget meeting with members of industry and trades, tax officers, and select professionals, the Union Finance Minister Nirmala Sitharaman said “Equalisation levy is my sovereign right”. She said companies like Netflix, Facebook get their consumers in a large country like India.
- “It’s important for the industry to stand up and tell their international sellers that India deserves to tax this,” Sitharaman said, adding, “Companies with revenues of less than $20 billion will not be part of this.”
What is an equalisation levy?
- The equalisation levy was conceptualised as an interim measure to collect revenues and drive global negotiations.
- In 2016, the equalisation levy was introduced on online sale of advertisements charged at 6 per cent as a withholding tax on the payers.
- The Finance Act 2020 expanded the scope of 2016 equalisation levy to include e-commerce transactions.
- The Act introduced Section 153(iv), which added Section 165A to the Finance Act 2016 to put equalisation levy charged at 2 per cent on the non-resident e-commerce operators with a turnover of over Rs 2 crore..
- The equalisation levy on e-commerce transactions (received from supply of goods or services) came into force from 1 April, 2020.
- The 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.
