38.6c New Delhi, India, Friday, April 19, 2024
Judiciary

Mastercard Moves Delhi HC Seeking Stay On Payment Equalization Levied On Digital Transactions

By Aditya Suresh Kale      25 August, 2020 03:02 PM      0 Comments
MasterCard moves DelhiHC

MasterCard has moved the Delhi High Court seeking a stay on payment of equalization levy on digital transactions on grounds that it would lead to double taxation.

Singapore-based MasterCard Asia Pacific Ltd. said that according to an Authority of Advance Ruling (AAR) order of June 2018 in favor of the income tax department, the company had a permanent establishment in India and was, therefore, paying income tax in line with the order.

The Delhi AAR had ruled that MasterCard had fixed place, service, and dependent agent permanent establishments in India under Article 5 of the India-Singapore Double Tax Avoidance Agreement in respect of services while using a global network and infrastructure to process card payment transactions for customers in India.

The company has challenged the AAR’s ruling and the matter is pending.

“Since the tax is already being paid, equalization levy cannot be sought as it would lead to double taxation,” a lawyer representing the company provided.

The company referred to Section 165A (2) (i) of the Income Tax Act, which states that the levy is not payable when a permanent establishment exists.

Senior lawyer Harish Salve had argued the case for MasterCard, being heard by the division bench of Justice Manmohan and Justice Sanjeev Narula. The Delhi High Court has issued a notice to the income tax department and will hear the case on August 18.

India began imposing an equalization levy of 2% on purchases through foreign e-commerce platforms with access to the domestic market from April 1. An equalization levy, or so-called Google Tax, was already imposed on digital advertising at 6% since 2016.

Experts said that while other e-commerce companies have sought clarity from the government on the applicability of the levy, the situation for MasterCard is unique because it was not directly challenging the equalization levy.

“Since MasterCard has already challenged the ruling of AAR, which stated that it has a PE in India and the matter is sub-judice, it is a peculiar situation wherein the levy will be subject to the outcome of the petition which is pending with the Delhi High Court,” said Amit Maheshwari, tax partner at AKM Global.

MasterCard has pro-actively asked for a stay on collection of the levy on services that it provides in India, he added.

 

 



Share this article:



Leave a feedback about this
TRENDING NEWS

pil-filed-by-ashwini-kumar-upadhyay-in-sc-for-yr-bachelor-of-law-degree-after-class
Trending Judiciary
PIL filed by Ashwini Kumar Upadhyay in SC for 3-yr Bachelor of Law degree after Class XII

PIL by Ashwini Kumar in SC seeks to shorten law degree to 3 years post-Class XII, citing current 5-year span as irrational.

18 April, 2024 11:21 AM
centre-sets-up-high-powered-committee-to-suggest-measures-to-end-discrimination-against-queer-community
Trending Executive
Centre sets up high-powered committee to suggest measures to end discrimination against queer community [Read Order]

Centre forms committee to end discrimination against the queer community, chaired by the Cabinet Secretary, following a Supreme Court directive.

18 April, 2024 12:11 PM

TOP STORIES

lsj-exclusive-interview-how-bjp-govt-will-free-chhattisgarh-from-naxal-menace
Trending Interview
LSJ Exclusive Interview: How BJP govt will free Chhattisgarh from “Naxal menace”? [Watch Video]

What is Chhattisgarh govt's plan for solving the Maoist/Naxalite problem in the state? Will there be a surgical strike against the Naxals or solution will be found via diplomatic channels? Read the Exclusive Interview with the Deputy Chief Minister Vijay Sharma.

13 April, 2024 12:33 PM
sc-rejects-review-of-order-to-pay-rs-154-cr-compensation-to-ex-air-force-staff-for-transfusion-of-hiv-infected-blood
Trending Judiciary
SC rejects review of order to pay Rs 1.54 Cr compensation to ex Air Force staff for transfusion of HIV infected blood [Read Order]

SC denies review of Rs 1.54 Cr HIV compensation order to ex-Air Force staff for medical negligence.

13 April, 2024 03:13 PM
cji-cautions-against-overlooking-ethical-legal-consideration-on-use-of-ai-in-court-adjudication
Trending Legal Insiders
CJI cautions against overlooking ethical legal consideration on use of AI in court adjudication

CJI D Y Chandrachud warns about ethical, legal challenges in AI use in courts, stressing need for thorough review.

13 April, 2024 07:08 PM
need-to-safeguard-judiciary-from-unwarranted-pressures-21-ex-judges-write-letter-to-cji
Trending Legal Insiders
Need to safeguard judiciary from unwarranted pressures: 21 ex-judges write letter to CJI

21 ex-judges write to CJI Chandrachud urging protection of judiciary from pressures undermining its integrity and autonomy.

15 April, 2024 12:17 PM

ADVERTISEMENT


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email