Akhilesh Ranjan Committee on Taxation of E-Commerce submitted report to Union Government

A Committee on Taxation of e-commerce constituted by the Central Board of Direct Taxes (CBDT) to examine the business models for e-commerce submitted its report on 21 March 2016.

•    The Report of the Committee was received by the Government of India and taken into consideration in the preparation of Finance Bill, 2016.
•    The Report provides the view of the Committee on issues related to taxation of e-commerce and recent international developments in this area.
•    The Committee included officers of the CBDT, representatives from the industry, the Institute of Chartered Accountants of India and tax experts. The 8-member committee was headed by Akhilesh Ranjan, Joint Secretary (FT&TR-I), CBDT, Department of Revenue, Ministry of Finance.
•    Equalization Levy may be imposed on payments to non-residents for specified services by a separate chapter in the Finance Act, 2016.
•    The Equalization Levy should be chargeable on any sum that is received by a non resident from a resident in India or a permanent establishment in India as a consideration for the specified digital services.
•    The rate of Equalization Levy may be between 6 to 8 percent of the gross sum received.
•    Equalization Levy should not be charged unless the consideration received for specified services in a year from a person in India is more than one lakh rupees.
•    Equalization Levy should also not be charged on payments received by a permanent establishment of a non-resident in India, which are attributable to that permanent establishment and taxable under Income-tax Act, 1961.
•    Every person that has received any sum chargeable to Equalization Levy, would be required to pay the Equalization Levy chargeable on that sum to the union government.
•    Every person that has received any sum chargeable to Equalization Levy, would be required to file a return of Sum chargeable to Equalization Levy as prescribed, if such total sum received by that person in a year exceeds ten crore rupees.
•    Any income arising from a transaction on which Equalization Levy has been paid should be exempted from income-tax, by necessary amendment in Section 10 of the Income-tax Act, 1961.
•    The definition of business connection in section 9 of the Income-tax Act, 1961 may be expanded to include the concept of significant economic presence.
•    Work on exploring the possibility of deduction of Equalization Levy by the payment gateways should be initiated immediately.
•    The implementation and impact of Equalization Levy may be monitored on a regular basis.