For any sale of goods or services by a “non-resident” e-commerce operator in India, the government will impose a 2% equalisation levy starting April 1, 2020, according to the amendments to the Finance Bill passed by the Lok Sabha on March 23.

Activities subject to equalisation levy

  • Purchases made in territory of India or using IP addresses located in India
  • Any sale of advertisements to a non-resident of India that target Indian residents or IP addresses within India
  • Any sale of data to a non-resident of India that has been collected from an Indian resident or IP addresses within India

Who is an e-commerce operator?

Any “non-resident” digital or electronic facility or platform (that is, not incorporated under the Indian Companies Act) that offers “e-commerce supply or services”, which are:

  • Online sale of goods owned/facilitated by an e-commerce operator
  • Online sale of services provided/facilitated by an e-commerce operator

Thus, the levy is imposed on platforms (Amazon, Flipkart, etc.), foreign single-brand retailers, and foreign service providers (Netflix, etc.).


  • Companies incorporated under Indian Companies Act are not included in this. Thus, Amazon India and Microsoft India, which are incorporated under the Companies Act, won’t have to pay this levy. However, if such companies offer any goods or services that were not included in their specified activities at the time of incorporation, equalisation levy would be imposed on those.
  • Companies that are already paying a 6% equalisation levy under Finance Act, 2016, for offering online advertising are exempted.
  • Sales, turnover or gross receipts, from e-commerce operations is less ₹2 crore in the previous year.
  • The foreign company has a “permanent establishment” in India that handles all of the e-commerce operations. Note that a “permanent establishment” is different from incorporation under the Companies Act.

Read more: Union Budget 2016: Equalisation Levy on Online Advertising