The Income-Tax Department is likely to monitor transactions by e-commerce firms in the coming year to maximise revenue collections including those from the equalisation levy.
This is part of the enforcement strategy in the Central Board of Director Taxes (CBDT) action plan for 2017-18 to boost revenue collections.
“E-commerce has emerged as a huge business in the past few years,” said the CBDT, noting that it not only involves advertisement on websites and portals of various organised and unorganised agencies, but also payments for job work – building website, translation of pages, data entry of text and research.
Similarly, it has also asked field formations to ensure that the equalisation levy is fully enforced. “The equalisation levy represents the government’s decision to enact legal mechanisms that can ensure that multinational companies providing services in digital format in India and utilising Indian resources do pay tax in India, even though they may not have a permanent establishment in India in terms of the relevant Double Taxation Avoidance Agreement,” said the CBDT.
Introduced in the Finance Act 2016, the equalisation levy mandates that a person making payment of over ₹1 lakh in a year to a non-resident, who does not has a permanent establishment in India, for online advertisement has to withhold six per cent of the amount paid as tax from June 1, 2016 and pay it to the government.
Noting that it is neither personal income tax nor corporate tax, the CBDT has asked its officials to work out procedures for enforcing the new levy.
In the interim it has advised TDS formations, especially those in international taxation, to monitor its implementation by companies.
Though latest data is not available, the Centre had collected ₹146 .50 crore from the levy in the first six months of its introduction by December last year.