If you are a global business doing business with India through an online means, then you may be aware of the famous Indian digital tax, which is 2% of your revenue earned from Indian customers, popularly known as Equalisation levy 2.0. This is a PAN (Indian Tax number) based levy and the foreign company doing business with India will need to apply for PAN in India to comply with this regulation.
Such equalisation levy impacts all small, mid and large units globally whose revenue from Indian customers exceeds INR 20 million. Such a low threshold does add to the compliance burden of global companies while doing business with India. Accordingly, there was a commitment from the Indian Government that the EQ Levy would go, if the world agreed to the outcome of Pillar I. However, such adoption of Pillar I will need a nod from the US Senate, which looks next to impossible given the composition and the opposition by the Republicans for Pillar I.
The international tax treaty allowing the adoption of Pillar I needs the nod of at least 60% of the global ultra-large multinationals, which are majorly located currently in the US.
In such a situation, the adoption of the allocation of rights to the market jurisdiction for the collection of taxes looks dim. Accordingly, the law around equalisation levy is here to stay for a while.
As a result, it is advised that you get your global business tested for equalisation levy even if you have B2B sales in India, including a subsidiary in India.
If you want to know more about the Equalisation levy, you can click here