Digital tax levied on digital businesses could become a new source of income for India in the current tight situation as e-commerce between Covid-19 and the digital economy grow. US multinationals like Amazon, Facebook and Google have complained to the US Trade Representative (USTR) office over the Digital Service Tax (DST).
Subsequently, the USTR office has initiated an inquiry into the justification of the case of imposing two percent DST on e-commerce companies in India. It is noteworthy that the USTR has started a similar investigation against nine other countries besides India.
The Finance Bill 2020-21 has been enacted into law from April 1, 2020 to impose a two percent digital tax on trade and services done by foreign digital companies with an annual turnover of more than two crore rupees in India.
In fact, digital tax is levied on income earned in India by foreign e-commerce companies. The scope of this tax includes e-commerce companies from all the countries of the world working in India.
It is noteworthy that at the summit meeting of Finance Ministers of the G-20 countries and the world's top financial policy-makers held in the city of Fukuoka, Japan on June 8 and 9 in the last year 2019, a consensus on the imposition of digital tax on digital global industry-business Was made
Then, during India's G-20 conference in Osaka, Japan, on 28 and 29 June, Prime Minister Narendra Modi said that India's data on data localization and digital tax is an asset that interests developing countries is necessary. The situation is that for the last one year most of the countries of the world have been supporting the imposition of digital tax on enterprises doing digital business, but major digital companies of some developed countries including America are against this new digital tax.
Estimates of how e-commerce will grow after Covid-19, from a global study report recently released by world-renowned global data agency Statista about the lockdown and change in life after Covid-19 can go. According to this report, 46 percent believe that they will no longer go crowded. In such a situation, a sharp increase in online shopping is set in view of the huge change in the habit and behavior of consumers in the world.
The situation is that in order to unlock the bright potential of retail trade in India between Covid-19, large online companies across the world, as well as business organizations in India, have started A new strategy is being made to try to connect local grocery shops and traders online. Between the lockdown on April 22, there has been a big deal for Reliance Jio and Facebook to enter e-retail shopping.
Facebook has announced the purchase of a 9.9 percent stake in Jio Platforms by investing $ 5.7 billion. Now Reliance's Geomart and Facebook's WhatsApp platform will work together to connect around 30 million retail traders and grocery shoppers in India with neighborhood customers.
Due to their transactions being digital, customers from neighborhood shops will get goods soon and the business of small shopkeepers will also increase. WhatsApp has around 400 million users in India, while Jio has 38 crore subscribers.
Undoubtedly e-commerce has revolutionized the retail business in the country. Due to the number of Internet users in the country at present, more than 62 crore, the pace of e-commerce in the country is increasing rapidly.
The report by Deloy India and Retail Association of India had stated that India's e-commerce market will reach $ 84 billion by 2021, which was just $ 24 billion in 2017. But now it is estimated that Covid-19 is expected to reach $ 200 billion by 2027-28.
It is important to note that as foreign investment in retail business increased in the country, the pace of e-commerce increased. In such a situation, on the one hand, necessary changes will be made in the e-commerce policy, on the other hand, the digital tax system will have to be vigorously pursued.
As such, the draft of the new e-commerce policy has been released for brainstorming by different parties. Under the new e-commerce policy in view of Kovid-19, regulatory is also to be ensured for the satisfactory resolution of consumer interests and quality of products in the e-commerce market.
Appropriate control has to be exercised on such multinational e-commerce companies that have made India the dumping ground for their products. Many big foreign e-commerce companies have been sending their products on a large scale in the country by evading tax. These companies ship these products to India by putting a label of gifts or samples on them.
The new e-commerce policy will have to make arrangements to curb permissible prices, heavy discounts, and deficit financing so that everyone gets equal opportunity to work. There is no denying that India will present itself firmly before the US Trade Representative Office and the World Trade Organization, and will not come under any pressure.
After the Covid-19, under the new global economic system, data will be the same importance in the future as gold is today. The move to impose the digital tax is the sovereign right of India and it could become an important foundation for India's economy in the future.