Govt won’t levy digital tax on foreign e-commerce firms if goods and services are sold through Indian arm

The amendment to Finance Bill 2021 clarifies that offshore e-commerce platforms don’t have to pay 2 per cent equalisation levy if they have permanent establishment or they pay any income tax here.

In a bid to provide a level-playing field, the government has decided not to levy 2 per cent digital service tax if goods and services are sold through Indian arm of foreign e-commerce players.

The amendment to Finance Bill 2021 clarifies that offshore e-commerce platforms don’t have to pay 2 per cent equalisation levy if they have permanent establishment or they pay any income tax here.

However, foreign firms who are not paying any tax will have to pay. The digital tax introduced in April 2020, applies only to non-resident companies with annual revenues in excess of Rs 2 crore, and covers online sales of goods and services to Indians.

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