Taxation

Choose the Correct Answer

Correct Answer : Option c

Explanation
Equalisation Levy was introduced in India in 2016, with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India. It is aimed at taxing business-to-business transactions. It is also often referred to as the "Google Tax"

Statement 1 is not correct: Equalisation Levy 2.0 is not an indirect tax, and not withheld by the service recipient. It is a direct tax liability on the non-resident e-commerce operator, who must pay 2% on gross receipts from Indian customers.

Statement 2 is correct: This is the core of Equalisation Levy 2.0, it applies to non-resident e-commerce operators earning from e-commerce supply/services involving Indian users.

Statement 3 is correct: If the non-resident has a Permanent Establishment (PE) in India, EL 2.0 does not apply, as such income is taxed under regular provisions.

Statement 4 is correct: Equalisation Levy 2.0 specifically applies to payments made to non-resident service providers. If the service provider is resident, Equalisation Levy 2.0 is not applicable.