New rules mandate e-com companies to segregate sale prices of goods and services

As per new e-commerce rules, foreign e-commerce goods and services 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.

As per an Economic Times report, companies will also have to segregate inventory of resident and non-resident sellers on their platforms. 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, says Rohinton Sidhwa, Tax Partner, 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 aggregators which don't own inventory, the systems or ERPs will have to segregate inventory from resident and non-resident sellers, added Pranav Sayta, National Leader-International Tax, EY India.