Govt not considering extending equalisation levy deadline

NEW DELHI: The government is not considering extending the deadline for payment of Equalisation Levy by non-resident e-commerce players, even though a majority of them are yet to deposit the first installment of the tax, an official said. The 2 per cent Equalisation Levy was introduced in the 2020-21 Budget and has come into effect from April 1, 2020. The deadline for payment of first installment of tax for April-june is July 7. The tax would be levied on consideration received by e-commerce operators from online supply of goods or services. A government official aware of the development said the government is not considering any extension of the deadline and asserted that the entities

liable to pay the levy had ample time to apply for PAN and prepare themselves for the levy. “The scheme was notified in March. The companies liable to pay the levy should have applied for PAN then. When globally digital tax is there to stay, there should be no expectation of a rollback. There would be no extension of the deadline for payment,” the official said.

As per law, late-payment of Equalisation Levy will attract interest at the rate of 1 per cent per month or part of the month. Non-payment can result in a penalty equal to the amount of Equalisation Levy, along with above interest.

Last week, the Income Tax Department brought in changes to the ‘challan' for paying Equalisation Levy, by expanding its scope to include non-resident e-commerce players. The amended challan also seeks mandatory PAN of deductor. Further, it provides for ‘Outside India' option while seeking address details.

Tax experts, however, said there are practical difficulties in getting PAN and many companies are not paying the equalisation levy as there is still considerable confusion and lack of clarity on the applicability of the same.

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the requirement of having a PAN and an Indian bank account could cause administrative delays in remittance by non-residents.

“Typically, PAN application for non-residents has attestation requirements which could be done by the Indian Embassy, Apostille Authority or overseas branch of a scheduled Indian Bank. Given the restricted functionality of Embassies and Apostille authorities across the world, obtaining PAN could take much longer than expected. Likewise, opening of a bank account by non-residents in India could also be a prolonged process in a pandemic struck situation. For non-residents having Indian group entities, discharge of Equalisation Levy by the Indian counterparts could have issues from an Indian exchange control regulations perspective, which needs to be precisely considered,” Jhunjhunwala said.