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Home Articles Taxation         Share :

Paper on Equalisation Levy - Preliminaries

 

 

Paper on Equalisation Levy - Preliminaries
 

By
 

CA Rashmin Chandulal Sanghvi
 

Date: 12th July 2016
 

I.1 This paper is divided into following parts:
 

I.2 Notes:
 

(i) We have written several articles on E-Commerce Taxation. After long debates, India has come out with Equalisation Levy as one important step towards introducing E-Commerce Taxation.
 

The aticle on Equalisation Levy –
 

a. Explains the tax law on Equalisation Levy.
 

b. Why it was needed – weaknesses in the existing system of International Taxation; and
 

c. Suggestions on way forward.
 

(ii) All the views expressed in this paper are my personal academic views. E-commerce Committee and Government of India may or may not agree with these views.
 

(iii) This paper discusses concepts and interpretations. Emphasis is on: “Why this tax?”. Analysing a concept needs more elaboration than interpreting a section.
 

(iv) I have received several queries & criticisms on Equalisation Levy. I have tried to deal with almost all queries & criticisms. Hence the paper has several parts & is long.
 

(v) Some of the issues have several aspects. In some cases, these aspects have been discussed in this paper at several places.
 

I.3 Short Forms:
 

For the sake of brevity, I have developed some short forms & used in this paper. These are marked (*). Kindly see them below.
 

BEPS : Base Erosion & Profit Shifting
 

COM : Country of Market
 

COR : Country of Residence
 

COS : Country of Source/Payment
 

*DTA : Double Tax Avoidance Agreement
 

*EL : Equalisation Levy
 

* EL TDS : Deduction of EL at Source
 

FTS : Fees for Technical Services
 

G20 : Group of 20 nations formed in the aftermath of US & Europe - Economic crises that started in the year 2008.
 

*IR : Indian Resident
 

*IRP : Indian Resident Payer
 

ITA : Income-tax Act of India.
 

NR : Non-Resident
 

OECD : Organisation for Economic Co-operation & Development
 

PE : Permanent Establishment
 

*R : Resident
 

RBI : Reserve Bank of India
 

SEP : Significant Economic presence.
 

TDS : Tax Deduction at Source (Income-tax)
 

TFDE : Task Force on Digital Economy
 

I.4 Relevant Publications:
 

BEPS ACTION ONE Report available on:
 

http://www.oecd-ilibrary.org/docserver/download/2315281e.pdf?expires=1464593118&id=id&accname=guest&checksum=E0224828F776C11A74DAA93C7FE69179
 

Indian E-Commerce Committee Report dated March 21, 2016 available on:
 

http://rashminsanghvi.com/downloads/taxation/international-taxation/E-Commerce_Committee_Report_proposing_Equalization_Levy.htm
 

I.5 Some Philosophy:
 

5.1 Truth:
 

Even if you are in the minority of one,
 

The truth is The Truth.
 

5.2 Truth must be told:
 

Publicly – Let all who care, listen.
 

Clearly – Let all who want, understand it.
 

Humbly – That is the way of decent people.
 

In substance – Core truth must be told without any hesitation & ambiguity.
 

5.3 A person in search of Truth will get Truth. A person who is not in search of truth will get anything but Truth.
 

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