EQUALISATION LEVY
SECTION 163: EXTENT, COMMENCEMENT AND APPLICATION
This chapter extends to the whole of India except the state of Jammu & Kashmir.
Note: Provided that the consideration received or receivable for specified services and for e-commerce supply or services shall not include the consideration, which are taxable as royalty or FTS in India under the Income Tax Act, read with the arrangement notified by the CG u/s 90/90A.
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SECTION 165: CHARGE OF EQUALISATION LEVY ON SPECIFIED SERVICE
Equalisation Levy @ 6% applicable if payment for specified service (ads) received/ receivable by Non – resident from: –
(a)A person resident in India & carrying Business or Profession, or
(b)Non – resident having P.E in India.
Notes:
1.Equalisation Levy not applicable in the following cases: –
• NR having P.E. in India & service connected with such PE (service provider),
• Aggregate amount received by NR from payer is up to Rs. 1,00,000 in P.Y.
• Where the payment for the specified service by the person resident in India, or the PE in India is not for the purpose of carrying out business or profession.
2.Specified services means: –
• Online Advertisement, or
• Any provision of digital advertisement space or any other facility or service for the purpose of online advertisement.
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SECTION 165A: CHARGE OF EQUALISATION LEVY ON E-COMMERCE SUPPLY OR SERVICES
Equalisation Levy @ 2% applicable of the consideration received or receivable by an e-commerce operator from e-commerce supply or services made or provided of facilitated by it: –
(i)To a person resident in India; or
(ii)To a NR in the specified circumstances*; or
(iii)To a person who buys such goods or services or both using IP address located in India.
Equalisation levy not applicable: –
• Where the e-commerce operator making or providing or facilitating e-commerce supply or services has a PE in India and such e-commerce supply or services is effectively connected with such PE;
• Where the equalisation levy is leviable u/s 165; or
• Turnover or gross receipts, of the e-commerce operator from the e-commerce supply or services made or provided or facilitated is less than Rs. 2 Crores during the P.Y.
*Specified Circumstances means: –
• Sale of advertisement, which targets a customer, who is resident in India or a customer who accesses the advertisement through IP address located in India; and
• Sale of data, collected from a person who is resident in India or from a person who uses IP address located in India.
Consideration received or receivable from e-commerce supply or services shall include: –
• Consideration for sale of goods whether it is own by e-commerce or not, however, it shall not include sale of goods which are owned by a person resident in India or by a PE in India of NR, and sale of such goods is effectively connected with such PE.
• Consideration for provision of services whether it is provided by e-commerce operator or not, however it shall not include provision of services which are provided by a person resident in India or by PE in India of NR, if provisions of such services is effectively connected with such PE.
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SECTION 166: COLLECTION AND RECOVERY OF EQUALISATION LEVY ON SPECIFIED SERVICES
Every Resident person carrying on Business or profession or a NR having P.E. in India shall deduct the equalisation levy u/s 165 from the amount paid/ payable to NR @ 6%. If aggregate amount of consideration for specified service is more than Rs. 1,00,000 in P.Y.
Notes:
1.Equalisation levy deducted shall be deposited to Central Government up to 7th of Next Month.
2.If any person fails to deduct equalisation levy, then also, he’s liable to pay levy to the Government.
3.Interest @ 1% per month or part of month (for delay period) shall be applicable on late deposit of levy u/s 165 or 165A.
SECTION 166A: COLLECTION AND RECOVERY OF EQUALISATION LEVY ON E-COMMERCE SUPPLY AND SERVICE
Equalisation levy u/s 165A, shall be paid by every e-commerce operator to the Central Government for the quarter of the F.Y ending within the following time limit:
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Date of ending of the quarter of F.Y.
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Due Date
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30th June
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7th July
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30Th September
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7th October
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31st December
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7th January
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31st March
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31st March
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SECTION 171: PENALTY FOR FAILURE TO DEDUCT OR PAY EQUALISATION LEVY
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Nature of Default
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Penalty
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Failure to deduct whole or part of equalisation levy u/s 166
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In addition to payment of equalization levy u/s 166(3) and interest u/s 170, penalty equal to the amount of equalisation levy that he failed to deduct would be liable
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Failure to deduct whole or part of equalisation levy as required u/s 166A
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In addition to equalisation levy u/s 166A and interest u/s 170, penalty equal to the amount of equalisation levy that he failed to pay is leviable.
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Failure to remit equalisation levy to the CG on or before 7th of the following month, after deduction of same u/s 165
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In addition to paying the equalisation levy on specified services u/s 166 and interest u/s 170, a penalty of Rs. 1000 for every day during which the failure continues is leviable.
However, such penalty shall not exceed the amount of equalisation levy that he failed to pay.
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SECTION 167: FURNISHING OF STATEMENT
1.Every operator or e-commerce operator has to file return in Form No. 1 on or before 30th June of immediately following financial year.
2.Belated/ revise return: If assessee or e-commerce operator has not furnished the return within time limit or furnished return within time, noticed any mistake, may furnish revised return. Such belated return or revised return has to be furnished within 2 years from the end of F.Y in which specified service was provided, or e-commerce supply or service was made or provided or facilitated.
3.If assessee or e-commerce operator fails to furnish the statement within the prescribed time, the AO may serve a notice upon such assessee requiring him to furnish the statement. If AO issue notice, then assessee has to file return within 30 days from the date of serving of such notice.
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