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Equalisation Levy

The document discusses India's equalization levy, which taxes digital advertising services provided by non-resident companies without a permanent establishment in India. The levy applies if annual payments exceed Rs. 1 lakh for online ads or Rs. 2 crore for e-commerce supply or services. It must be deducted at 6% for ads or 2% for e-commerce and paid quarterly or monthly. Late payment results in interest and penalties. Expenditures are disallowed if the levy is unpaid or paid after the income tax return deadline.

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102 views20 pages

Equalisation Levy

The document discusses India's equalization levy, which taxes digital advertising services provided by non-resident companies without a permanent establishment in India. The levy applies if annual payments exceed Rs. 1 lakh for online ads or Rs. 2 crore for e-commerce supply or services. It must be deducted at 6% for ads or 2% for e-commerce and paid quarterly or monthly. Late payment results in interest and penalties. Expenditures are disallowed if the levy is unpaid or paid after the income tax return deadline.

Uploaded by

Amal P Tomy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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EQUALISATION LEVY

Introduced in Finance Act, 2016


Contents
 Introduction
 What is equalisation levy?
 Need for equalisation levy?
 Section 165,Applicability & Non Applicability
 Section 165A, Applicability & Non Applicability
 Section 166
 Section 166A
 Return Filling
 Penalty
 Disallowance u/s 40(a)(ib)
Introduction
Over the last decade, information technology has gone through an
exponential expansion phase in India and globally. This has led to an
increase in the supply and procurement of digital services. Consequently,
this has given rise to various new business models, where there is a
heavy reliance on digital and telecommunication networks.
To bring clarity in this regard, the government introduced vide budget
2016, the equalisation levy. Equalisation levy was first introduced in India
by Finance Act, 2016
What is Equalisation Levy

“Equalisation Levy" means the tax


leviable on consideration received or
receivable for any specified service
or specified cicumstances under the
provisions of this Income Tax Act.
.
Need for equalisation levy?

Indian Company US Company

Advertisement expense allowed as Income earned is not taxed in India


deduction while computing tax
section 37(1)
SECTION 165
Payment for digital/online advertisement


Supplier
Non Resident not having P.E in India


Receiver
Every person resident in India and carrying on business or profession, or
Non-resident having PE in India.
Applicability of Section 165

 If aggregate payment for the *specified service exceed Rs 1,00,000


equalisation levy will deducted at 6%.

Specified Service Means


 Online Advertisement
 Any provision for digital advertising space or any other facility or service for the purpose of
online advertisement
 Any other service as may be notifiedby the Central Government
Non Applicability

Jammu & Kashmir


If aggregate payment for
specified services ≤ ₹1,00,000
in PY

Payment made for specified


service is not for the purpose of
business or profession

NR has PE in India & Service


is connected to such PE
Section 165 A [with effect from 01/04/2020]

Sale of goods of services through e-commerce platform

Supplier
E-commerce operator not having P.E in India

Receiver
Every person resident in India and carrying on business or profession, or
Non-resident having PE in India.
Applicability of Section 165 A

 If aggregate Sales, turnover or gross receipts, as the case may be of the


ECommerce operator from such business is more than ₹ 2 crore during previous
year he shall pay equalization levy at the rate of 2%.

Specified Circumstances Means


 Sale of advertisement, which targets customer,who is resident in India or access
advertisement through IP Address located in India
 Sale of Data, collected from a person who is resident in India or from a person who uses IP
Address located in India
Non Applicability

Jammu &
Kashmir
If E-Commerce Operator has
PE in India & Goods &
Service is connected to such
PE

Where Equalisation
levy is leviable u/s 165
of FA 2016
Section 166
Collection and recovery of equalisation levy on specified services

 Every person, being a resident and carrying on business or profession or


a non-resident having a P.E in India shall deduct the amount paid or
payable to a non-resident in respect of the specified service at the rate
specified in section 165.
 The equalisation levy so deducted during any month shall be paid by
every assessee to the the Central Government by the seventh day of the
month immediately following the said calendar month.
 To pay the equalisation levy one needs to use Challan No./ITNS 285
.
Section 166 A
Collection and recovery of equalisation levy on e-commerce supply or services

 The equalisation levy referred in section 165A, shall be paid


by every e-commerce operator to the credit of the Central
Government for the quarter of the financial year ending with
the date specified in the Table below;
Date of ending of the quarter Due date for payment

30th June 7th July

30th September 7th October

31st December 7th January

31st March 31st March


Return Filing
 Due date of furnishing Equalisation Levy Statement which must be done in
Form-1, is on or before the 30th June immediately following the Financial
Year.
 Belated/Revised: 2 years from end of FY in which Goods/Service was
provided
 Incase of failure to furnish the statement within the time prescribed he
shall be liable to pay a penalty of one hundred rupees for each day during
which the failure continues.

Interest
 In case delay in deposit, Interest @ 1% p.m. or part of the month shall be
applicable
Penalty

Fails to pay 165- Rs 1000 per day ,maximum Amount


Equivalent to Equalisation levy.

Fails to pay 165A- Amount Equivalent to Equalisation


levy.

Fails to deduct 165 Amount Equivalent to Equalisation


levy.
Disallowance of expenditure u/s 40(a)
(ib)
 Levy has not been deducted or
 Deducted but not deposited upto due date of filing of ITR.
 Where such levy is deducted in subsequent PY or deducted
but deposited after duedate of filing of ITR, Expenditure
allowed in the PY in which such levy is paid
Reference:

 https://incometaxindia.gov.in
 The DT Concise Book CA Mayank Trivedi
 https://youtu.be/xikmt3VIwpQ
 https://www.taxcorner.co.in/2020/04/equalisation-levy-2020-on-non-resident-e-
commerce-operator.html
.

Thank You :)

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