Equalization Levy under Income Tax
CHARGE OF EQUALISATION LEVY ➢ Rate: 6 % of the amount of consideration received or receivable. ➢ Service Provider: Any non-resident person ➢ Service Receiver: ▪ A person resident in India & carrying on business and profession ▪ A non-resident having permanent establishment in India ➢ Services covered: ▪ Online advertisement such as payment to Google or Facebook.
▪ Any provision for digital advertising space or facilities/ service for the purpose of online advertisement
EXEMPTIONS FROM EQUALISATION LEVY ➢ the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment, OR ➢ the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident does not exceed one lakh rupees, OR ➢ where the payment for the specified service is not for the purposes of carrying out business or profession.
PAYMENT AND RETURNS ➢ Every person, who is responsible to deduct the equalisation levy shall pay the amount of equalisation levy so deducted, to the credit of central government within a period of 7 days from the end of the month, in which such levy was deducted.
➢ Every person responsible to deduct the levy is also required to furnish an equalisation levy statement depicting the particulars regarding all the specified services during the financial year in Form-1. This statement is required to be filed on or before 30th June from the end of relevant financial year.
CONSEQUENCES OF NOT DEDUCTING ➢ Every person who defaults would be liable to pay 1% simple interest per month of delay. ➢ Failure to deduct would also attract penalty equal to the amount of levy which ought to have been deducted. ➢ Failure to deduct but not remitting the same to government attracts the above plus Rs. 1,000 per day of default. ➢ Failure to file the return by 30th June would attract a penalty of Rs. 100 per day of default. ➢ Further if the amount of equalisation levy is not paid before the furnishing of the Income Tax return then the amount of expense on which it ought to have been levied shall be disallowed. However, once the same is remitted to the government the expense can be claimed.