DIGITAL TAX

DIGITAL TAX

Subject : Economy

Context :The government has decided not to levy 2% digital service tax if goods and services are sold through Indian arm of foreign e-commerce players.

Concept :

• The amendment to Finance Bill 2021 clarifies that offshore e-commerce platforms don’t have to pay 2% equalisation levy if they have permanent establishment or they pay any income tax here.
• However, foreign companies who are not paying any tax will have to pay.
• The tax applies only to non-resident companies with annual revenue in excess of Rs 2 crore, and covers online sales of goods and services to Indians.

Digital Taxes

• Digital tax is a tax that is levied on digital business activities.
• The digital businesses include both the digital-only brands that focus on virtual commodities and services and the services traditional market players use for transforming their businesses with digital technologies.
• Virtual commodities include downloaded software, website applications and digital assets like ebooks, image files, audio clips/audio files, movies or digital files.
• Digital services include those provided by social media companies, e-commerce platforms etc.