A group of seven top industry associations representing internet and technology giants such as Google, Facebook, Amazon, Microsoft and Adobe has sought withdrawal of the new equalisation levy that comes into force from April 1, due to its widespread negative impact on American companies.
The associations have written a joint letter to United States Trade Representative Robert E Lighthizer seeking “swift engagement with the Government of India” to raise “strong concerns” on the new levy, which they said was a “highly discriminatory new tax on foreign companies.”
Last week, the government expanded the scope of the equalisation levy – which was first imposed in 2016 – to all overseas e-commerce transactions originating from India. This was done through an amendment to the Finance Bill, passed by Parliament on March 23.
Apart from firms such as Netflix, Airbnb and Bookings.com, technology, internet and Software as a Service (SaaS) companies ranging from Microsoft to Adobe and Google to Facebook, which offer services to Indians through their overseas arms, are expected to be impacted by the new 2% levy.
“The tax was incorporated into the Union Budget 2020 at a late stage and without any public consultation or Parliamentary debate and yet is set to apply only one week later, starting on April 1,” according to the letter dated March 27 which ET has reviewed.
The letter has been jointly written by Computing Technology Industry Association (CompTIA), Information Technology Industry Council (ITI), Internet Association (IA), US-India Strategic Partnership Forum (USISPF), United States Council for International Business (USCIB) and two other industry bodies.
Separately, the Internet and Mobile Association of India (IAMAI) has asked the government to withdraw the levy saying it requires companies to change its internal systems and billing mechanisms and would burden the industry at a time when it is struggling due to the Covid-19 pandemic.
“This sudden imposing of an additional levy at such times will only make matters worse,” IAMAI said in a statement on Tuesday.