Equalisation levy on e-commerce firms: Govt says tax in line with WTO rules

It emphasised that the levy was applicable prospectively, and could not be said to have 'extra-territorial' application.

India has jumped to defend the imposition of Google Tax — a 2 per cent equalisation levy on e-commerce operators — calling it non-discriminatory in nature.

In its comment on the Section 301 probe launched by the US last month, the government said it was fully consistent with World Trade Organization norms and international taxation agreements.

It emphasised that the levy was applicable prospectively, and could not be said to have ‘extra-territorial’ application.

“The equalisation levy does not discriminate against non-resident e-commerce operators. The underlying policy objective and application of India’s equalisation levy is to ensure a neutral and equitable taxation is applicable to e-commerce operators that are resident in India, or have physical presence in India, and those not resident in India,” New Delhi said in its public comment.

Further, it said that far from targeting any US entity, the purpose was to ensure fairness, healthy competition, and to exercise the ability of governments to tax businesses having a nexus with the Indian market through digital operations.

“It does not discriminate against firms based in the US, as it applies equally to all non-resident e-commerce operators not having a permanent establishment in India, irrespective of the origin,” it added.

New Delhi highlighted that the threshold application for the levy — which is annual revenues in excess of Rs 20 million (which the USTR has noted to be approximately $267,000) — is low, aimed at exempting very small e-commerce operators globally.

The deadline for filing the equalisation levy, for the first quarter, was July 7.