India changes digital tax form to include new levy on foreign e-commerce companies

The income-tax division has launched modifications to the shape used to pay equalisation levy, to incorporate the choice of paying up the brand new 2% levy on digital transactions performed in India by overseas e-commerce firms.

The new levy was launched within the Union Budget and was made efficient from April 1, with the primary instalment cost due on July 7.

The IT division has amended the challan ITNS 285 – which is used to pay the levy – via a web-based mechanism. The modifications now embody ‘e-commerce operator for e-commerce supply or services’ underneath sort of deductor class, and everlasting account variety of PAN of the deductor or the e-commerce firm has been sought.

Importantly, the modified challan gives for ‘Outside India’ choice whereas in search of the tackle particulars of the payee, enabling overseas firms to key in particulars and make the cost due.

The transfer comes as authorities authorities stood their floor on implementation of the brand new levy, even because the United States has opened an investigation into evaluating whether or not the digital taxes imposed by India and 9 different nations, discriminates in opposition to US-based firms.

The modification of the challan clearly signifies that the federal government has not heeded to representations from e-commerce firms’ and worldwide enterprise associations that had sought deferment of the levy by a yr.

Experts stated that the transfer has put further burden on firms to get PAN and cling to the principles inside a really brief time frame, at the same time as they await detailed clarifications via FAQS from the federal government on elements that will entail the appliance of the levy and if there are any exemptions from accounting, resembling companies or items which are executed on-line however delivered offline.

“This has rather imposed a burdensome and challenging task for non-resident e-commerce players to apply for and obtain PAN within 1 business day in the midst of curbs, lockdown and pandemic affected business life and also organize the mode of payment through an Indian bank account or debit card issued by an Indian Bank,” stated Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP.

Detailed FAQs will present a lot wanted readability and time to taxpayers, to raised perceive their obligations, proceed with figuring out the suitable quantity of tax payable by them, and guarantee due compliances.

However, the rushed transfer might trigger substantial challenges in discharging first cost legal responsibility, in case curiosity, penalty and potential litigation for delayed funds are to be averted, they added.