Your browser is currently blocking notification.
Please follow this instruction to subscribe:
X
Notifications are already enabled.
X

US Ecommerce Companies Ask Govt To Defer Payment Of Digital Tax

US Ecommerce Companies Ask Govt To Defer Payment Of Digital Tax

The companies complained about lack of clarity regarding provisions for paying the tax

Previously, foreign companies had asked the government to charge levy only on facilitation fee for each transaction

Digital tax mandates foreign companies to pay 2% of every digital transaction as tax

American ecommerce companies like Amazon and Walmart-owned Flipkart have asked the government to defer payment of the 2% equalisation levy on digital transactions, the country’s new digital tax, the first instalment of which was due on July 7. 

The Board of directors of the US-India Strategic Partnership Forum (USISPF), in a letter to Finance Secretary Ajay Bhushan Pandey, complained about the lack of clarity regarding the provisions, and technical difficulties faced by companies in making the payment. 

In March, the government had said that foreign ecommerce companies would be taxed 2% for all digital transactions in the country from April 1. On Saturday (July 4), the Income Tax department notified changes in its online challan used to pay equalisation levy, to facilitate the payment of the new digital tax. However, foreign companies in India such as Amazon, Netflix and Flipkart, who fall under the ambit of the new tax, were caught off-guard and complained about being given just two days to get forex conversions and a Personal Account Number (PAN). 

The USISPF letter, dated July 6 and accessed by Reuters, said that the tax was riddled with “various ambiguities and interpretational concerns” and it wasn’t clear on what amount the companies needed to pay the levy.

In May, foreign companies, in their representation to the government, had asked for the new levy to be charged on the facilitation fee for each transaction and not on the transaction amount as a whole. They had also requested clarification regarding the definition of online sale of goods, services, and digital/electronic platforms.

As of Monday (July 6), the companies were still waiting for the government to release a list of FAQs (Frequently Asked Questions) which could help them in paying the new levy. 

The government’s move comes while the US investigates whether digital taxes imposed by nine countries, including India, are discriminating against American companies. 

The digital tax is aimed at taxing foreign companies with a significant client base in India. However, by billing their customers from offshore units, the companies escape the purview of the country’s tax system. 

In 2016, equalisation levy at the rate of 6% was first introduced on online advertisement services. The government netted around INR 1,000 Cr from the levy in 2018-19. 

https://inc42.com/infocus/blockchain-this-week/tech-mahindra-launches-blockchain-for-media-and-entertainment-industry-more/
Loading Next…