The Income Tax Department has modified the challan form for depositing equalization levy by non-resident e-commerce companies, to include the option of paying up the new 2% levy on digital transactions conducted in India by foreign e-commerce companies.
The new levy was introduced in the Union Budget and was made effective from April 1, with the first installment payment due on July 7, 2020.
The modified challan provides for ‘Outside India’ option while seeking the address details of the payee, enabling foreign companies to key in details and make the payment due.
The IT department has amended the challan ITNS 285 – which is used to pay the levy through an online mechanism.
The changes now include ‘e-commerce operator for e-commerce supply or services’ under the type of deductor category, and the permanent account number of PAN of the deductor or the e-commerce company has been sought.
The move comes as government authorities stood their ground on implementation of the new levy, even as the United States has opened an investigation into evaluating whether the digital taxes imposed by India and nine other countries, discriminates against US-based companies.
This move of government clearly indicates that the government has not heeded to representations from e-commerce companies and international business associations that had sought deferment of the levy by a year.
Detailed FAQs will provide much-needed clarity and time to taxpayers, to better understand their obligations, proceed with determining the appropriate amount of tax payable by them, and ensure due to compliances.
However, the rushed move could cause substantial challenges in discharging first payment liability, in case interest, penalty and potential litigation for delayed payments are to be avoided.