Several non resident e-Commerce operator has started, providing the service through digital media, without having physical presence in India. Because of which, India Tax department were not able to tax such transaction due to non-availability of PE in India. Government of India by Finance Act 2020, has introduced new provision 01.04.2020
What provision says, in brief?
Equalisation levy (EL) of 2% shall be charged on consideration received or receivable for E commerce supply or service by Non resident E commerce operator.
Who is liable to Discharge Equalisation levy (EL)?
E Commerce operator as defined in this section is liable to discharge liability of EL. Definition of “E Commerce Operator”(ECO) is given as below:-
“e-commerce operator” means a non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or online provision of services or both;
From the above, it is clear that, To be called “E commerce operator” for this section, Following are pre-requisites:-
1) Service provider should be Non resident as per Income Tax Act
2) Service should own or manages online platform for Sale of goods or Service or Both
Note-This section is applicable for only Non residents(NR) and there is no differentiation between Goods or service
What are the transaction covered her?
Meaning “E Commerce supply or Service” is given as follows:-
“e-commerce supply or services” means—
(i) online sale of goods owned by the e-commerce operator; or
(ii) online provision of services provided by the e-commerce operator; or
(iii) online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
(iv) any combination of activities listed in clause (i), (ii) or clause (iii);’
From above, it is evident that, Following are the transactions covered by this sections:-
1) Sale of Goods or Provision of Service by ECO, on his own account
2) Facilitation of sale of Goods /services, on sold by others
Note-Both Direct and indirect Sale of goods or provision of services. Providing facility of online platform for sale of goods /service is subject to EL
| Nature of Transaction | Service Receiver | Service Provide |
| 1) Sale of Goods/ Service | Resident (irrespective of location of IP) or Person using IP address located in India | Non Resident ECO |
| 2) Facilitation of Sale of goods /Service | Resident (irrespective of location of IP) or Person using IP address located in India | Non Resident ECO |
| 3) Sale of Advertisement, targeting Residents | Non resident | Non Resident ECO |
| 4) Sale of Data collected from Resident | Non resident | Non Resident ECO |
Incidence of Tax on ECO?
Tax shall be charged on gross consideration received or receivable for transaction referred in Column(1) from the Person referred in Column(2) of the above table
Mechanism of Tax Payment
ECO is liable to pay tax on above mentioned transaction.
It covers not only B2B(business to business) but also B2C(business to consumer) transactions.
Time Limit for payment of Equalisation levy
| Date of ending of the financial year | Due date of the quarter of financial Year |
| 1. 30th June | 7th July |
| 2. 30th September | 7th October |
| 3. 31st December | 7th January |
| 4. 31st March | 31st March |
Non Applicability of the above provision related to Equalisation levy
1) ECO has Permanent establishment (PE) in India and Provision of supply or service is effectively connected with PE or
2) Online Marketing or digital marketing service or
3) Gross receipt/Sale is less than INR 2 Crores in the Financial year
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