Lok Sabha Question No. 98 (STARRED), answered on 2016-04-29
Subject: Taxation of e-Commerce
Ministry: FINANCE
Asked by: Shrirang Appa Barne

- (a)  Yes, Madam.
- (b) A Committee of eight members, comprising two Joint Secretaries in CBDT, one Commissioner Income-Tax in CBDT, one Director in CBDT, one Commissioner of  Income-Tax  (International  Taxation),  one  industry  representative  nominated by Confederation of the Indian Industries, one representative nominated by the Institute  of  Chartered  Accountants  of  India  and  one  expert  in  international taxation  and  taxation  of  e-commerce  was  constituted  by  CBDT.  The  terms  of reference  of  the  Committee  included  detailing  the  business  models  for  ecommerce,  identifying  and  detailing  the  direct  tax  issues  in  regard  to  ecommerce  transactions  and  suggesting  approaches  to  deal  with  these  issues under different business models.
- (c)   Yes, Madam.
- (d)  The  Committee  in  its  report  titled  'Proposal  for  equalization  levy  on  Specified Transactions' in February, 2016 recommended for:

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK    SABHA STARRED QUESTION NO. *98

TO BE ANSWERED ON FRIDAY, THE 29 TH  APRIL, 2016 9 TH Vaisakha, 1938 (SAKA)

## TAXATION OF E-COMMERCE

*†98. SHRI SHRIRANG APPA BARNE:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Government has set up any Committee to examine taxation from ecommerce in the country;
- (b) if so, the composition and the terms of reference of the said Committee;
- (c) whether the said Committee has submitted its report;
- (d) if so, the details of recommendations made by them along with the details of the action so far taken by the Government on such recommendations; and
- (e) the extent to which revenue of the Government is likely to be generated from ecommerce in the country?

## ANSWER FINANCE MINISTER (SHRI ARUN JAITLEY)

-  Equalization  Levy  on  specified  digital  services  and  facilities  including  online marketing and advertisements, etc.
-  This  Equalization  Levy  may  be  charged  at  a  rate  between  6  to  8  %  of  the gross  payment  made  for  specified  services  and  facilities  including  online marketing and advertisements, cloud computing, website designing  hosting and  maintenance,  digital  space,  digital  platforms  for  sale  of  goods  and services and online use or download  of software and applications.
-  This equalization levy should be made applicable on only payment exceeding Rs. one lakh made for specified services by a person resident in India or a permanent establishment of a non-resident person to a non-resident enterprise.
-  Income arising from payments which are subjected to equalisation levy may be exempted from income-tax.

Taking into account the recommendations of the committee, on Taxation on E-Commerce the Finance Bill, 2016, proposes to provide for the following:

1.  An equalisation levy of 6 % of the amount of consideration for specified services(online  advertisement,  any  provision  for  digital  advertising  space or any other facility or service for the purpose of online advertisement and includes  other  notified  services)  any  received  or  receivable  by  a  nonresident, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India.
2.  However, no such levy shall be made if:
3. (i)  the aggregate amount of consideration for specified services received or receivable by a non-resident from a person resident in India or from a  non-resident  having  a  permanent  establishment  in  India  does  not exceed one lakh rupees in any previous year
4. (ii)  The non-resident providing specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment.
3.  Any income arising from providing specified services on which equalisation levy is chargeable shall be exempted from Income-tax.

(e) No estimate of revenue likely to be generated by Equalization Levy was made by the Committee.

*****