Equalisation Levy On E Commerce

Equalisation Levy was introduced vide the Finance Act 2016 on certain non-resident businesses. Recently, with the enactment of the Finance Act 2020, the scope of the Equalisation Levy has been broadened. The current article briefs up the Equalisation Levy On E Commerce operators, which have been introduced in the Finance Act 2020.

Understanding the important terms

Before understanding the provisions of Equalisation Levy On E Commerce, it is firstly important to understand the terms ‘e-commerce operator’ and ‘e-commerce supply/ services’. Both the terms are explained hereunder- Section 164(ca) of the Act covers the definition of the term ‘e-commerce operator’. As per the definition, an e-commerce operator means a non-resident who owns or operates or manages digital/ electronic facility/ electronic platform for the online sale of goods/ online provision of services or both. Section 164(cb) of the Act covers the definition of the term ‘e-commerce supply/ services’. As per the definition, e-commerce supply/ services mean the following-

Online sale of goods which are owned by the e-commerce operator; or
Online provision of services which is provided by the e-commerce operator; or
Online sale of goods or online provision of services or both which is facilitated by the e-commerce operator; or
Combination of any of the above activities.

Understanding the new provisions relating to Equalisation Levy On E Commerce

The entire new section 165A has been inserted into the Income Tax Act, which defines the scope of Equalisation Levy On E Commerce. The gist of provisions of section 165A is explained hereunder-

Applicability of Equalisation Levy On E Commerce	The amount of consideration received/ receivable by an e-commerce operator from an e-commerce supply/ services. Such e-commerce supply/ service should be made/ provided/ facilitated too- · A person resident in India; or · A non-resident in following specified circumstances; or 1. Sale of advertisement to the extent it targets the customer who is a resident in India or targets a customer who accesses the advertisement through the internet protocol address located in India. 2. Sale of data to the extent it is collected from a person who is resident in India or collected from a person who uses the internet protocol address located in India. · A person who buys e-commerce goods or services or both using internet protocol address located in India.
Rate of Equalisation Levy	2%
Transaction outside the purview of Equalisation Levy On E Commerce	Equalisation Levy shall not be applicable under the following- · Cases, wherein, Equalisation Levy is applicable under section 165. · Cases, wherein, the E-commerce operator has a permanent establishment in India, and the E-commerce supply/ service is effectively connected with such permanent establishment. · Cases, wherein, the sale or turnover or gross receipt of the e-commerce operator from the e-commerce supply/ service during the year is less than INR 2 Crore.

It is important to note that the provisions of section 165A are made effective from 1

st April 2020.

List of Compliances

If the provisions of section 165A get applicable, the Equalisation Levy is payable by the non-resident e-commerce operator. The due date of payment of Equalisation Levy is tabulated hereunder-

Quarter	Payment due date
April to June	7th July
July to September	7th October
October to December	7th January
January to March	31st March

An e-commerce operator is required to furnish an annual statement on or before 30

th June of the succeeding financial year.

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Frequently Asked Questions

Common questions about Equalisation Levy on E Commerce in India: Key Details.

An e-commerce operator is a non-resident entity that owns, operates, or manages a digital or electronic facility or platform for the online sale of goods, online provision of services, or both, as defined in Section 164(ca) of the Income Tax Act.

As per Section 164(cb) of the Income Tax Act, e-commerce supply or service refers to the online sale of goods owned by the e-commerce operator, online provision of services by the e-commerce operator, online sale or provision of goods or services facilitated by the e-commerce operator, or a combination of these activities.

The Equalisation Levy on e-commerce transactions is imposed at a rate of 2% on the consideration received or receivable by the e-commerce operator.

The Equalisation Levy on e-commerce transactions is applicable on the consideration received or receivable by an e-commerce operator from e-commerce supply or services provided or facilitated to a person resident in India, a non-resident in specified circumstances, or a person using an internet protocol address located in India.

The specified circumstances for non-residents under the Equalisation Levy provisions include the sale of advertisements targeting customers resident in India or accessing the advertisement through an Indian IP address, and the sale of data collected from persons resident in India or using an Indian IP address.

Yes, the Equalisation Levy on e-commerce transactions is not applicable in cases where the Equalisation Levy under Section 165 is already applicable, where the e-commerce operator has a permanent establishment in India and the transaction is effectively connected to it, or where the e-commerce operator's turnover from such transactions is less than INR 2 crore in a year.

The due date for payment of the Equalisation Levy on e-commerce transactions is the 7th of the month following the end of each quarter (April-June, July-September, October-December) and 31st March for the January-March quarter.

Yes, e-commerce operators are required to furnish an annual statement on or before 30th June of the succeeding financial year, providing details of the transactions subject to the Equalisation Levy.

The provisions related to the Equalisation Levy on e-commerce transactions, as introduced by the Finance Act 2020, are effective from 1st April 2020.

No, the Equalisation Levy on e-commerce transactions applies only to non-resident e-commerce operators. Indian e-commerce operators are subject to regular income tax provisions and not the Equalisation Levy.