The equalization levy that came in action since the year 2016 is the Digital Services Tax By India that the Government of India uses for advertising in India for global giants such as Facebook, Amazon, and the likes of it. The equalization levy which is 2% tax, was extended as of April 1st to all e-commerce companies as well exporting in India.
The Internet Association consisting of Facebook, Amazon, Google, and others, has defined this levy by saying that it is unreasonable and it discriminates against the US companies. According to the reports, The association pressed that some action should be taken against the equalization levy of India that cost them a 2% tax.
The latest version of the levy that came into action since April 1st covers all the goods and services that are provided through foreign companies that include Alibaba, Amazon, Netflix, etc.
About this, the Internet Association has to say that this tax scheme of India does not provide technical clarity and the purpose behind this updated version of tax is that the country wants to use the money for their economic recovery that was the result of the current pandemic.
The government of India, while defending the law said that “The equalization levy does not discriminate against non-resident e-commerce operators. The underlying policy objective and application of India’s equalization levy is to ensure neutral and equitable taxation is applicable to e-commerce operators that are resident in India or have a physical presence in India, and those not residents in India.”