India foreign e-commerce equalisation levy 1 April 2020
- Apr 7, 2020 | Richard Asquith
India’s 2% withholding tax – equalisation levy - on e-commerce transactions on non-resident e-commerce businesses has received official assent on 27 March 2020. It came into effect on 1 April 2020. The ‘equalisation tax’ is designed to provide a level playing field for resident marketplaces or providers who are subject to Indian income taxes.
The 2% tax is chargeable on income of online commerce providers for goods or services to Indian non-business customers (B2C). Providers subject to the tax obligations includes: non-resident who owns, operates; or manages a digital or electronic facility or platform for online sales of goods, online provision of services, or both.
The provider is liable to the tax if they are providing their own goods or service, and if facilitating the sales on their electronic platforms of other sellers.
Online advertising provided by non-residents is subject to a 6% tax.
There is a registration threshold of INR 20million per annum. Filings will be on a quarterly basis, with submissions and payments due on the 7thof the month following the quarter end. Late payments will be subject to 1% monthly interest charge.