Last updated: June 6th, 2020 2:40 AM

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.