Google tax: Compliance norms amended for e-commerce firms

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October 30, 2020 1:45 AM

Also, according to an amendment to the annual statement forms and appeal documents required to be furnished by relevant firms, it is mandatory for them to obtain permanent account number (PAN) in India.

The industry had represented to the government earlier to reconsider the provision for non-residents to obtain PAN.The industry had represented to the government earlier to reconsider the provision for non-residents to obtain PAN.

The government on Thursday notified the changes in the manner of collection of the 2% equalisation levy on earnings originating from India for non-resident e-commerce platform operators. While deducting and depositing the levy — which came into effect on April 1– has hitherto been the obligation of resident recipient of services, the onus has now been shifted to the non-resident operator; the obligation will have to be met on a quarterly basis.

Also, according to an amendment to the annual statement forms and appeal documents required to be furnished by relevant firms, it is mandatory for them to obtain permanent account number (PAN) in India. The industry had represented to the government earlier to reconsider the provision for non-residents to obtain PAN.

“The challans for payment of e-commerce equalisation levy were notified in July 2020 and required furnishing of PAN and Indian bank account for remittance of levy,” Sandeep Jhunjhunwala, partner at Nangia Andersen LLP said. He added that a new electronic code for the person verifying the annual statement has also been introduced but it wasn’t clear if it would be an alternative to PAN.

Further, the government has also retained the aspect of limited appeal against only the amount of penalty levied in case of non-payment of the levy but not the quantum of tax assessed itself.

Equalisation levy, also referred to as Google Tax was first introduced by Finance Act, 2016, at the rate of 6% on payments for digital advertisement services received by non-resident companies without a permanent establishment there, if these exceeded a threshold. The levy is designed to nullify the advantage of foreign e-commerce firms sans a physical presence in India over local competitors. The Budget 2020-21 expanded its scope to include consideration received by non-resident e-commerce operators from e-commerce supply or services, at a rate of 2%.

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