Date: 21^st March 2016.

E-Commerce Committee Report proposing Equalization Levy

The Central Board of Direct Taxes (CBDT) had constituted a Committee on Taxation of E-commerce to provide suggestions for resolving taxation issues related to e-commerce. Mr. Rashmin Sanghvi was a member of this Committee and provided considerable suggestions to the committee.

The Committee’s report submitted in February 2016 was accepted by the CBDT and its recommendation of introducing an Equalisation Levy on specified transactions forms part of the Finance Bill 2016.

India is perhaps the first country to introduce this Levy based on the OECD BEPS Report on Action 1 – “Addressing the Tax Challenges of the Digital Economy”.

An article by Mr. Rashmin Sanghvi explaining the provisions of this Levy is available here. We welcome comments from the legal fraternity and industry players on this novel concept. Please email us at [email protected] .

With best regards,

Rashmin Sanghvi & Associates.

PROPOSAL FOR
EQUALIZATION LEVY
ON
SPECIFIED TRANSACTIONS
(Report of the Committee on Taxation of E-Commerce)

 

February, 2016

 

Prepared by the Committee on Taxation of E-Commerce formed by the
Central Board of Direct Taxes, Department of Revenue, Ministry of Finance,
Government of India

 

CONTENTS

 

Executive Summary
Section 1	Constitution and Mandate of the Committee
Section 2	Digital Economy: Current status and Growth Prospects
Section 3	Tax Challenges from Digital Economy & Action 1 in BEPS
Section 4	Issues related to Tax Neutrality between Domestic & Multi-National Enterprises and their Implications
Section 5	Principles for Allocating Taxing Rights, Factors that contribute to Profitability & Historical Review of Existing Rules
Section 6	Broader Tax Challenges related to Nexus and Characterization of Income from Digital Transactions and common Disputes
Section 7	Issues related to Value of data & User Activity in Multidimensional Business Models
Section 8	Recent International Literature on Taxation of Digital Economy Enterprise
Section 9	Options to address broader tax challenges of Digital Economy in the Indian Context
Section 10	Characteristics of the Proposed ‘Equalization Levy’
Section 11	Conclusions & Recommendations of the Committee