Equalisation levy scope set to rise

NEW DELHI: The government on Monday eased the proposed rules for taxing non-resident Indians to ensure that the middle-class and normal workers are not burdened, while arming itself with powers to raise excise duty on petrol and diesel by Rs 8 per litre each in future.There was major relief for Indians whose children study abroad as overseas remittance out of specified domestic loans will attract 0.5% TCS (tax collected at source), for which credit is available while calculating the annual liability, against the 5% proposed in the Finance Bill on overseas remittances of over Rs 7 lakh.Finance minister Nirmala Sitharaman moved an amendment to the Bill to increase the limit up to which the Centre can raise special excise duty on petrol and diesel to Rs 18 per litre and Rs 12, respectively. The government hiked excise on the two auto fuels earlier this month, taking advantage of the fall in global crude prices in the wake of coronavirus pandemic.This will allow the government to increase the revenue collection from petrol and diesel, without hopefully, changing the final price to the consumer, to augment any revenue loss on account of economic losses in other sectors in the current scenario,” said Bipin Sapra, partner for indirect tax at consulting firm EY India.The Finance Bill, 2020, was passed by Lok Sabha in a record 29 minutes on Monday, with no discussion or debate being permitted. The decision to pass the legislation was taken at an all-party meeting, where Speaker Om Birla and floor leaders of all parties agreed to take the exceptional step in light of the country-wide lockdown and the need to adjourn Parliament early.When the Finance Bill was taken up for consideration and passing, however, Congress’s floor leader Adhir Ranjan Chowdhury and DMK’s T R Baalu demanded that the Centre announce a financial bailout package to combat coronavirus before the passage of the bill. The demand was, however, not acceded by Birla. Later in the day, Rajya Sabha too approved the general budget, including the Finance Bill, and returned it to the lower House.Sitharaman also introduced a provision to expand the scope of equalisation levy — a tax on digital transactions — to non-resident ecommerce operators. “The tax rate has been fixed at 2% and the obligation will be on non-resident e-commerce operators themselves to pay this levy at the end of each quarter and applies with effect from April 1, 2020,” said Amit Maheshwari, managing partner Ashok Maheshwary & Associates. The provision, which was not part of the original set of proposals in the Finance Bill, overrides the tax treaties.