Global Business Bodies Nudge FM Sitharaman To Defer Equalisation Levy

International business bodies, whose members include Walmart, Amazon, Google, Netflix, have approached Union Finance Minister Nirmala Sitharaman for deferring the 2 per cent tax imposed on non-resident e-commerce companies by nine months due to the crisis triggered by Covid-19.

A group of nine business bodies including US India Business Council, Information Technology Industry Council, Japan Electronics and Information Technology Industries Association, Asia-Pacific MSME Trade coalition and DigitialEurope, have demanded consultation on the equalisation levy (2 per cent tax) imposed by the government in this fiscal year.

In a joint letter to the minister, the business bodies representing mostly American, European, Australian and Asian firms mentioned commitment of G20 leaders including that of Prime Minister Narendra Modi for realising a free, fair, non-discriminatory, transparent, predictable, and stable trade and investment environment, and to keep global markets open.

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“It is in the spirit of this international commitment that we write to respectfully request a formal stakeholder consultation on the expansion of the equalisation levy and a delay by at least nine months of the implementation of “Section 165A” of the Union Budget 2020,” the letter said.

It said Section 165A expands the scope of India's existing equalisation levy to establish a new, 2 per cent levy on the online sale of goods and services into India by non-resident e-commerce operators. These are those firms that sell goods to Indian residents online but don't have presence in India that can be covered under tax net.

The bodies have also approached the US Trade Representative to call for discussion on India's move to impose equalisation levy while the matter is still under discussion at international level.