WhatsApp's integration into Jio's e-com platform holds the key:
Experts
Some recent
regulatory developments may have precipitated the Facebook-Jio
deal. Going forward, this may increasingly prompt foreign e-commerce
operators to consider setting up base in India, say legal and tax experts.
Pressure from the
recently-expanded scope of Equalisation Levy that covers non-resident e-commerce
platforms, the Reserve Bank of India’s (RBI’s) mandate that all data
related to payments should be stored only in Indian systems, besides the
rigours of an imminent Data Protection Law have played their part in shaping
the Facebook-Jio deal, noted Tarun Jain, partner, BMR Legal.
The deal may not
throw up any major tax issues, other than tax complexities associated with
e-commerce business, said Abhishek Rastogi, partner at Khaitan & Co. The
expanded scope of Equalisation Levy, as per the Finance Act 2020, is unlikely
to influence the deal since most Jio platforms are likely to qualify as Indian
e-commerce operator.
“It will, however,
be interesting to watch the manner in which WhatsApp is integrated with these
platforms and facilitates online transactions,” said Lokesh Shah, partner,
L&L Partners.
Given the wide
scope of Equalisation Levy, which also includes a facilitator such as WhatsApp
service, the applicability will need to be examined based on the actual role of
WhatsApp/ Facebook, Shah added.
Experts, however,
point out that becoming an Indian tax resident could turn out to be a
double-edged sword for foreign e-commerce players as it would expose the global
income of such operators to tax in India.
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