Foreign e-commerce companies will have to split sale price, fee retrospectively

Foreign e-commerce goods or service providers operating in India will have to retrospectively segregate sale prices of goods or services on the site and commissions so as to distinguish between the heads on which equalisation levy becomes applicable. Companies will also have to segregate inventory of resident and non-resident sellers on their platforms, said experts.

“For example, a website operating on a marketplace model could list goods from both Indian and foreign sellers, but based on the new amendment, the intention appears to exclude the sales price of goods of Indian sellers from the ambit of the levy,” said Rohinton Sidhwa, tax partner at Deloitte India.


Since sale prices would belong to the resident seller but commissions that the foreign platform charges would belong to the foreign entity, equalisation levy would apply on the latter and local taxes would apply on the former.

“In case of market places or aggregator which don’t own inventory, the systems or ERPs will have to devise a method of segregating inventory from resident and non-resident sellers,” said Pranav Sayta, national leader international tax at EY India.


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