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Introduction of Equalisation Levy

From the date the Equalisation Levy was introduced by the Indian Government, it has been in news. Few clarifications were brought in Budget 2021 wherein it was provided that ‘Online sale of goods and provision of services that qualify an organization as an e-commerce operator was proposed to include the following activities undertaken online — acceptance of offer for sale, placing of the purchase order, acceptance of purchase order, payment of consideration and supply of goods or provision of services, partly or wholly.

While keeping the above provisions, the Finance Bill passed by Lok Sabha also provided that the Equalisation Levy would not be applicable on consideration of the sale of goods or services which are owned by persons resident in India or by a permanent establishment of a non-resident in India [both for goods and services]. This exclusion seems to provide a breather by excluding goods sold by, and services provided by Indian taxpayers through foreign e-commerce operators from the ambit of Equalisation Levy. However, there are still certain grey areas that need further clarification as to whether the amount of consideration for calculating Equalisation Levy is to be considered gross or net i.e., any other kind of levy like VAT, import duty, etc. forming part of the consideration is to be included or excluded for such calculations.

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