Recently,Domestic Small and medium enterprises(SMEs) and start-ups have written to Revenue Secretary.They have complained about the equalisation levy they have to pay to foreign companies for doing business in India.
They have said that this has resulted in increased costs as well as loss of revenue to the government.
The equalisation levy was introduced in 2016.It is a direct tax of 6% on payments made by residents to non-resident companies for (a)online advertisement (b)provision of digital and advertising space or (c)any other facility or service for online advertisement.
The complaint made by the SMEs and start-ups is that many companies, despite doing business in India were sending invoices from abroad thereby making their clients pay the equalisation levy.
They have also pointed out that this has not only increased the compliance costs for companies but it has also led to loss of government tax revenue since these foreign companies were not providing invoices from within India.
In order to rectify this,the start-ups have requested the government to mandate that any global corporation having sales and marketing operations in India must be required to invoice all Indian customers from their India entity.