15 April 2020 
Andrea Marshall, Tax Specialist
We are grateful to Simon Robinson at KPMG, who has shared with BUFDG the following alert from his colleagues in India.
The alert relates to a recent change in tax legislation in respect of India’s “Equalisation Levy” (“EL”). Broadly this is India’s version of the Digital Services Tax, brought in in response to BEPS Action 1, and the changes set-out below will broaden its application.
EL previously applied to payments made in India to non-residents in respect of online advertising and certain related services. From 1 April 2020 the EL will apply at a rate of 2% on income received by an “e-commerce operator”.
Who will this apply to?
The term "e-commerce operator" means anon-resident who owns, operates or manages a digital or electronic facility or platform, for the online sale of goods and/or the online provision of services.
An "e-commerce supply" is:
The scope is very wide, and is likely to impact foreign universities (e.g. UK universities) undertaking the following transactions in India:
What is the turnover threshold?
EL would be applicable only where the sales, turnover, gross receipts of the e-commerce operator from e-commerce supply/ services is INR 20,000,000 (~ £ 210k) or more during the previous year and that e-commerce operator does not have a permanent establishment (“PE”) in India.
What is the potential impact?
Foreign entities who fall within the scope of the amended EL provisions would be required to undertake the following steps/ compliances:
Obtain tax registration in India (if not already obtained);
The consequences for non-compliance may be the application of interest, but also potential penal and prosecution consequences.
