9 lobbying groups, including the US Chamber of Commerce and the Asia Internet Coalition, have asked the Indian government to delay expansion of the new equalisation levy, that will impact companies already reeling from the impact of COVID-19.
The organisations have asked for at least another 9 months for the expansion of the equalisation levy, so that formal consultations can be conducted. The timeframe in which the new levy was imposed “allowed for neither the dialogue nor the significant structural changes that would be necessary for impacted firms to effectively implement a levy of this scope and complexity”, the groups said in the letter to Finance Minister Nirmala Sitharaman.
A delay would also allow for the inter-government economic Organisation for Economic Co-operation and Development (OECD) negotiations to take place, the letter said, signatories to which include Allied for Startups, Asia Pacific MSME Trade Coalition (AMTC), Digital Europe, Australia Services Roundtable (ASR), Information Technology Industry Council (ITI), Japan Electronics and Information Technology Industries Association (JEITA), and U.S.-India Business Council (USIBC)
The new levy imposes 2% equalisation levy on online sale of goods and services by foreign e-commerce companies. This has applied to foreign e-commerce operators such as Amazon.com starting April 1. The tax was introduced in the Budget 2020-21 in March. The tax is aimed at foreign companies which have large client bases in India, but were billing them via their offshore units, thus, escaping India’s tax system. It also applies to ad revenue earned from companies overseas if those ads target Indian customers.