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.

Facebook-Jio deal may see more foreign e-commerce firms flock to India

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.

ALSO READ: Jio Platforms now more valuable than rest of RIL businesses put together

“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.

Covid-19: E-commerce saves the day as delivery workers emerge as heros

Trade Minister Piyush Goyal held a video conference with nearly two dozen e-commerce executives in a bid to understand hurdles faced by the sector.

Three days after the nationwide lockdown was imposed, Devender Singh revved up his motorcycle to deliver meat and eggs to customers - but his heart was in his mouth as he closed in on a police barricade on a deserted New Delhi road.

Beatings of delivery workers by overzealous police after Prime Minister Narendra Modi suddenly imposed the world's biggest lockdown to contain the coronavirus had unnerved him.

"That day, it felt like my time to get thrashed had come," Singh, 30, told Reuters on a quiet summer afternoon as he was out making deliveries.

"But what I was expecting didn't happen. The police were very friendly - they just asked me where I was going and why."

ALSO READ: Coronavirus LIVE: Maharashtra records 1135 cases, Tamil Nadu 738, Delhi 669

Singh said he was allowed to proceed after he flashed a so-called movement pass authorised by the police and given to him by his employer Licious, an online meat store backed by Bertelsmann's venture capital arm and Silicon Valley's Mayfield Fund.

E-commerce is now limping back to life in the country as the border closures, warehouse shutdowns and general confusion that initially accompanied the three-week shutdown order have eased. While still clearing a backlog of previously placed orders, most online retailers are accepting new orders, albeit with delayed deliveries and a limited product catalogue.

Moreover, political coldness towards e-commerce, which many in India see as a threat to millions of brick-and-mortar retailers, has faded. While grocery stores and pharmacies are still open, it has become evident that Singh and the thousands of delivery workers like him have become crucial frontline soldiers in the country's battle against the pandemic.