Taxation under Equilisation Levy

 

Equalisation Levy 

Is a tax levied on consideration received or receivable for specified services or e-commerce supply or services from a non-resident not having a permanent establishment in India. This levy was introduced in the Finance Act 2016 and was amended in the Finance Act 2020. It is applicable to Indian residents who are engaged in any profession or business, or who have a permanent business in India.

The Equalisation Levy is applicable to consideration received or receivable for specified services such as online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement, and any other service as may be notified by the Central Government. It also applies to consideration received or receivable for e-commerce supply or services, such as online sale of goods or providing services or both, including digital products, and any other service as may be notified by the Central Government.

The Equalisation Levy is charged at the rate of 6% of the amount of consideration received or receivable for specified services or e-commerce supply or services. The levy is to be paid to the Central Government on or before the due date. In case of failure to remit the levy on or before the due date, a penalty of Rs. 1,000 for every day during which the failure continues is applicable. However, the penalty shall not exceed the amount of equalisation levy that was failed to pay.

The Equalisation Levy is seen as a temporary alternative to the GAFA (Google, Apple, Facebook and Amazon) tax until such measure is well defined in India. It is also seen as a way to tax foreign digital companies.