The Finance Minister’s Budget 2024 proposal to withdraw the equalisation levy for e-commerce. Presented on July 23, 2024, the budget introduces changes to income tax slabs, long-term capital gains ( LTCG ), and short-term capital gains ( STCG ) rates, among others.
Effective August 1, 2024, the 2% equalisation levy will no longer apply to consideration received for e-commerce supply or services. Introduced in 2016, the levy aimed to tax non-resident digital companies providing services to Indian firms, ensuring a level playing field for local digital businesses.
It is stated that “It is proposed that this equalisation levy at the rate of 2% shall not be applicable to consideration received or receivable for e- commerce supply or services, on or after the 1st day of August, 2024.”
Initially, the levy targeted specified digital services like online advertising, with a threshold of Rs. 100,000 in a financial year. In April 2020, the scope expanded to include non-resident e-commerce operators, covering foreign companies owning or managing e-commerce platforms for online sales of goods and services.
The government levied a 2% tax on payments received by non-resident e-commerce operators for online sales, applicable only when aggregate sales exceeded Rs 2 crore in a financial year. This move aimed to tax foreign companies facilitating online sales in India.
The withdrawal of the equalisation levy for e-commerce is a notable change, potentially impacting non-resident e-commerce operators and foreign companies providing digital services in India. As the taxation landscape evolves, businesses must adapt to these changes to ensure compliance and minimise tax liabilities.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
