Govt Imposes Google Tax On Foreign Ecommerce Portals! 2% Tax On All Transactions For Amazon, Walmart
The Income Tax Department has now tweaked the challan for payment of equalisation levy and broadened its scope.
It now includes non-resident e-commerce companies supplying goods and services online, and adds the option of paying 2% levy on digital transactions conducted in India, by these service recipient companies.
What is this Equalisation Levy about?
The Income Tax department has amended the challan ITNS 285. It is used to pay the levy through an online mechanism.
The amended challan now adds “e-commerce operator for e-commerce type of deductor”.
It mandates the deductor to have and provide a permanent account number (PAN).
In the changes made, the IT dept has added “e-commerce operator for e-commerce type of deductor” under the challan.
It also provides an ‘Outside India’ option while seeking address details.
In the last budget, the govt had put down the widened scope for international e-comm companies, introducing a 2% tax on them.
It came into effect from April 1, 2020.
Speaking of this, the 1st instalment of this tax is due on July 7, with the first quarter ending in June 30.
Problems Faced by Foreign E-comm Companies
We mentioned earlier that the changes mandate the deductor to have a PAN.
This means over two dozen non-resident tech companies will not be able to pay the taxes unless they have PAN. This makes it highly difficult for these companies to apply for online PAN application, in such times of lockdown.
Experts and observers of the sector have asked the dept to extend the due date (July 7) by at least a month’s time.
Sandeep Jhunjhunwala, a partner at Nangia Andersen LLP says, “This has rather imposed a burdensome and challenging task for non-resident e-commerce players to apply for and obtain a Permanent Account Number within one business day in the midst of curbs, lockdown and pandemic affected business life and also organise the mode of payment through an Indian bank account or debit card issued by an Indian bank”.
The government has clarified that all the doubts and clarity regarding the issue will be sorted soon when they provide a detailed FAQ.