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Levy on digital services
Why is it in news?
- According to tax experts, Finance Ministry’s move to impose an equalisation levy has led to a lot of ambiguity and needs clarity.
- Finance Ministry has announced levy of 2% on e-commerce supplies and services from April 1.
Details:
- Earlier, the government had imposed a 6% equalisation levy on online advertisement services by non-resident entities.
- Later, the scope was expanded to online sale of goods and provision of services from April 1.
Concerns of some tax Experts:
- The language is quite ambiguous.
- While the intention appears to be taxing e-commerce, it cannot end up taxing transactions where the medium is only the Internet.
- There should be a distinction between digital goods/digital services on one hand and goods and services supplied using the digital medium as a mode of delivery or for transacting.