InvestorQ : Why is the new levy on foreign ecommerce companies a contentious issue?
nishi Shah made post

Why is the new levy on foreign ecommerce companies a contentious issue?

priya Shah answered.
11 months ago
The new equalization levy by the government on foreign e-commerce companies was widely debated, with many e-commerce companies and international business associations demanding its postponement. One of the main bones of contention was the scope of the equalization levy.

Foreign e-commerce companies were of the opinion that the government should impose a 2% levy only on the facilitation fee they get for transactions they carry out in India instead of on the full transaction and said this should be treated as their turnover. They also suggested that the levy should not be imposed on services or goods that are executed online but delivered offline.

The government widened the scope of the 2% equalization levy to include the consideration that e-commerce companies get from transactions originating in India, starting from 1st April 2020. This move by the government had also attracted a lot of criticism and rebuke from the United States government. The US is the home country of a lot of the foreign e-commerce companies operating in India and eligible to pay the tax.

The US government has opened an investigation into evaluating whether the digital taxes imposed by India and nine other countries, discriminates against US-based companies. However, in spite of these differences and disputes, the government has gone ahead and made the required modification to include foreign e-commerce companies in the purview of the new equalization levy.