Introduction to Equalisation Levy - International Taxation - Income Tax

Introduction to Equalisation Levy India was the first country to levy Equalisation Levy ('EQL'), Consequent to the BEPS Action Report 1, a committee was constituted by the CBDT to evaluate the alternatives suggested in the BEPS Action Report 1 for addressing the challenges arising on taxing the digital economy. Pursuant to the recommendations of the Committee, Chapter VIII of the Finance Act, 2016, titled Equalisation Levy was introduced. The CBDT issued a notification dated 27th May, 2016, stating that the provisions of Chapter VIII relating to the equalisation levy would come into effect from 1st June 2016. This Chapter extends to the whole of India except Jammu and Kashmir. It applies in respect of consideration received or receivable for specified services provided on or after 1.6.2016. In order to widen its scope of levy, Finance Act 2020 extended equalization levy to consideration received for e-commerce supply or services made or provided or facilitated on or after the 1st day of April, 2020 but before the 1st day of August, 2024 . However, consideration received or receivable would not include consideration which are taxable as royalty or fees for technical services in India. Therefore, Equalisation levy is at the rate- on specified services - @6% and on E-commerce Supply or Services - @2% Notes:- E-Commerce Business Models Online platform e-commerce business model Market based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital electronic network to act as facilitator between buyer and seller. Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by an e-commerce entity and is sold to the consumers directly. Subscription e-commerce business model Digital identity and its potential for e-commerce Aadhar unique number for valid verification. Subscription access to tangible and bundled goods and services. Online-Offline e-commerce business models. Mobile technologies Helping e-commerce to flourish in brick-and-mortar stores. Online groceries A new e-commerce frontier. Innovative payment mechanisms. Digital Wallets Mobile money- Extending e-commerce to the unbanked.