Equalisation levy & Amendment by Union Budget 2021

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Equalisation levy & Amendment by Union Budget 2021

Government had imposed in the last year a 2% tax on the sale of goods and services that take place through non-resident digital operators having an annual turnover or sales of more than Rs 2 crore.

3 more amendment / clarifications have been carried out in this budget on Equalisation levy:

  1. Services which are subject to tax as royalty or fees for technical services under the Income Tax Act will be out of the ambit.
  1. a. Non resident E Com operator would be subject to the levy for the supply of goods or services for any of these activities-

Acceptance of the offer for sale, placing the purchase order, acceptance of the purchase order, payment of consideration and supply of goods or provision of services, partly or wholly.

  1. Thus if an overseas hotel is merely taking online payments, it might get hit by the provisions.
  2. Payment gateways may also be coming under these provisions.

3. Entire value of goods or services would be taxed even where the aggregator or the e commerce marketplace is merely facilitating the transaction for another vendor. Thus, Alibaba will have to pay a levy on the entire sale amount and not just the commission

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