The Finance Act of 2020 introduced several significant changes to India’s taxation system. One such change was the introduction of section 165A in the Finance Act of 2016, which imposed a 2% equalization levy on non-resident e-commerce operators. This provision was added just before the first COVID-19 lockdown without thorough parliamentary deliberation or industry consultation. Consequently, it became riddled with ambiguity and vagueness. To compound the issue, the government has yet to provide clarifications or FAQs, even after the deadline for the first instalment payment has passed, resulting in confusion and payment defaults.
In this discussion, the panel aims to decode this provision, assess its impact on various companies, particularly small businesses, and examine its implications for geopolitical relationships. The consultation serves as a platform to raise awareness about the potential consequences of unilaterally imposing the equalization levy on the country and its current economic situation.
