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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.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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