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Ecommerce under the equalization levy net

The Finance Act of 2020 has imposed an equilization levy of 2% on consideration received or recievable by a ecommerce operator from an ecommerce sale of goods or services facilitated by it to :

  • A person resident in India
  • A Non resident in specified circumstances
  • A person using an Indian IP address for purchase of such goods/services

The levy shall not be applicable in case the foreign merchant has a Permanent establishment in India which is connected such supply of goods or services or where the transaction pertains to online advertising which is already subject to 6% equalization levy.

Entities whose total sales to India are less than INR 20 million will also not be required to deposit the said levy with the Indian government.

The levy has come into effect from the 1st of April and the levy shall be required to be deposited within 7 days from the end of each quarter ( due date for payment for Q4 ending March shall remain 31st March)

Compliance

To comply with the above foreign merchants will have to make quarterly deposits of the levy as discussed and also file an annual return with the government. Late payment of levy attracts simple interest at the rate of 1% per month and failure to pay can attract penalty up to the amount of equalization levy.

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