In what would impact majors like Airbnb, booking.com, Agoda, Zoom, GoDaddy, Tencent, Expedia, Google, Facebook, Netflix and many more, fresh concerns have been raised by stakeholders about the provisions moved by the government to bring in non-resident e-commerce operators within the ambit of equalization levy or what is popularly known as Google tax. Non-resident e-commerce operators are the ones who do not have a permanent establishment in India but do have a presence in the country.
Stakeholders have now approached the Central Board of Direct Taxes – CBDT, the key direct tax policymaking authority under the Revenue Department of Finance Ministry, regarding the levy of two percent tax to be paid by non-resident e-commerce operators on consideration received or receivable from the online sale of goods or online provision of services made or provided or facilitated by it to Indian residents or using Indian Internet Protocol (‘IP’) address.
It was in the passage of the Finance Act 2020 that the government had introduced this levy. Equalisation Levy is a levy on the procurement of online advertising from a non-resident or a foreign company. In this case, a six percent levy is to be paid by the payer in India.
From April 01, 2020, it has also been extended to non-resident e-commerce operators providing goods or services to residents in India and to non-residents if it pertains to online advertising targeted in India and sale of data for Indian consumers. In this case, the levy shall be two percent and shall be paid by an e-commerce operator only on a quarterly basis. The government has also said that the e-commerce operator shall also be required to file an annual return in Form-1. However, stakeholders feel that there are still many ambiguities which the government should clarify as the law has a lot of interpretation issues.