Applicable from 1st April 2021, The Confederation of All India Traders (CAIT) proposes a 2% additional tax on the foreign e-commerce giants such as Amazon, Flipkart, Microsoft, Netflix whether providing services or engaged in the sale of goods. The government aims to cover the non-resident e-commerce operators like the firms that sell goods and services to Indian residents online and collect their data through online mode for business purposes but don't have a presence in India under this tax net.
The Provision has been made in the budget by making amendments in Section 163 sub clause(3), Section 164 sub clause(cb), Section 165 sub section(3) and clause(b) of the Finance Act, 2016.
This amendment has been pushed so that the foreign companies will not have a monopoly in the Indian Market and cannot control the Indian e-commerce and retail trade. This will also ensure that there will be no malpractices done by global companies.
It's definitely a bold step which has been taken by the government and is being taken positively as of now by the traders, states CAIT. The change will be therefore applicable w.e.f 1st April 2021. All the foreign companies which are involved in the sale of online goods and services would be expected to pay an additional 2% tax with effect from 1st April 2020.
The tax will be applicable for the consideration of goods and services whether or not the provider owns the portal.
The introduction of the Equalisation Levy (EL) is meant to equalize the digital space for all of India and to prevent any fraud of tax laws on digital transactions.
However, there seems to be a little falter in the equalization levy as the government hasn't specified.
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