Govt makes it mandatory for foreign cos operating e-commerce platforms in India to have PAN

Foreign entities operating e-commerce platforms in India or having access to Indian market will be mandated to have permanent account numbers (PAN) for paying up equalisation levy.

"An e-commerce operator will be a "non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or online provision of services or both," the CBDT said in the notification issued Thursday.

The change has been notified by the Central Board of Direct Taxes (CBDT) as it amended the equalisation levy rules of 2016 to include e-commerce operators as those required to pay the equalisation levy, and for various procedural, regulatory compliances related to filing of the levy's returns besides issue of notice of demand and filing of appeals.


CBDT has also amended existing forms to create separate sections for reporting of the payments of levy by e-commerce operators. The changes also include the option of keying in Aadhaar in place of PAN while filing the details.

Govt had imposed a 2% tax in the budget for FY21 on the sale of goods or delivery of services through a non-resident ecommerce operator.

-Equalisation levy

The changes have been made to align the annual statement and forms with the new e-commerce equalisation levy introduced earlier this fiscal year, experts said.

"The annual statement and appeal documents also mandate quoting the PAN/ Aadhar of non-residents, thereby corroborating the view that non-resident e-commerce entities may need to obtain PAN in India," Sandeep Jhunjhunwala, partner at Nangia Andersen LLP.

An electronic verification code for the person verifying the annual statement has also been introduced.

The challans for payment of e-commerce equalisation levy were notified in July 2020 and required furnishing of PAN and Indian bank account for remittance of levy.

"The notified appeal forms, both for appeals before the Commissioner (Appeals) as well as Tribunal, provide for a mention of the amount of equalisation levy in dispute, which doesn’t tone with the existing issue of limited appeal remedy, only for penalty levied in case of non-payment of equalisation levy, and not for equalisation levy assessed by the tax officer," Jhunjhunwala noted.

E-commerce operators were brought within the ambit of equalisation levy by virtue of Finance Act, 2020. The government had imposed a 2% tax in the budget for FY21 on the sale of goods or delivery of services through a non-resident ecommerce operator.

Apart from the consequential amendments, there has been expansion in the scope of rights for tax authorities to lay down standards and procedures for the purpose of ensuring secure capture and transmission of data in filing of various forms, said Divakar Vijayasarathy, partner at tax consultancy firm DVS Advisors LLP.

Experts added that ecommerce companies are still seeking clarity from the government on implementation, applicability and computation of the levy.