Paper on Equalisation Levy - Preliminaries
By
CA Rashmin Chandulal Sanghvi
Date: 12th July 2016
I.1 This paper is divided into following parts:
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Sr. No.
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Topics Covered
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I.
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II.
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III.
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The Equalisation Levy – in simple words for the businessman & the tax advisor.
For the Experts & Critics: IV to VIII.
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IV.
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V.
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VI.
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VII.
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VIII.
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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:
Indian E-Commerce Committee Report dated March 21, 2016 available on:
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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