Finance Secretary Ajay Bhushan Pandey says tax collections were encouraging in the first quarter
Finance Secretary Ajay Bhushan Pandey
has ruled out any clarification in the form of ‘frequently asked questions’ or FAQs for the newly introduced equalisation levy
— also called the Google tax — on foreign e-commerce players, arguing that the law was already “very clear”.
This is a setback to non-resident e-commerce firms, which were awaiting FAQs and seeking clarification on the 2 per cent equalisation levy
introduced in April. Facebook, Google, Amazon, Uber, and Netflix are covered under the tax.
“The amendments have been approved by Parliament, and notified. We came to know that some FAQs were being floated. The objective of FAQs is to explain the law in simple words. But here, the law is very clear,” said Pandey, at Ficci’s 17th Annual Capital Market Conference. He said every company had a tax advisor to interpret the law for them. The deadline for the first instalment, without interest and penalty, was July 7. But, not many firms met the deadline.
“FAQs can only reproduce the law in simple language. If we give out scenarios, it is like giving an advance ruling, which the revenue department cannot do,” said Pandey over videoconferencing.
India has now imposed 2 per cent digital tax on trade and services by non-resident e-commerce firms with a turnover of over Rs 2 crore. Till last year, the tax was applicable only on digital advertising services, at 6 per cent. Such operators have to pay the tax at the end of each quarter.
With regard to revenue position, Pandey said tax collections were encouraging in the first quarter. Income-tax (I-T) collections in the first quarter (Q1) were 80 per cent of last year’s figure. “In Q1, tax collections were encouraging. I-T collected through advance tax and tax deducted at source (TDS) was 80 per cent of last year’s.” He said a fall of 20 per cent in turnover did not indicate a 20 per cent drop in corporation tax paid by a company, but that the firm may have slipped into losses and thus, unable to any tax.
The goods and services tax (GST) of close to Rs 91,000 crore was collected in June. “The 80 per cent advance tax and TDS receipts, along with the June GST collection, gives us hope that businesses are finding ways to get started and revive business,” he added.