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EQUALISATION LEVY – CHAPTER VIII OF FINANCE ACT, 2016


       EQUALISATION LEVY

Equalisation levy means the tax leviable on consideration received or receivable for any specified service or e-commerce supply or services.


Charge of equalization levy on specified services:

Equalisation levy @6% is leviable on the amount of consideration for specified service received or receivable by a person, being a non-resident from -

(a) a person resident in India and carrying on business or profession; or

(b) a non-resident having a PE in India.

 Threshold limit:

Equalisation levy is deductible if the aggregate amount of consideration for specified service in a previous year exceeds One Lakh Rupees


Non-Charge of equalisation levy on specified services:


Equalisation levy is not chargeable, where –

(a) the non-resident providing the specified service has a PE in India and the specified service is effectively connected with such PE;

(b) the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a PE in India, does not exceed ` 1 lakh; or

(c) where the payment for the specified service by the person resident in India, or the PE in India is not for the purposes of carrying out business or profession.


Chargeability of equalization levy on E-Commerce supply or services: 


Equalization levy@ 2% would be chargeable on the amount of consideration received or receivable by an e-commerce operator from e-commerce supply or services made or provided or facilitated by it—

(1) To a person resident in India; or

(2) To a non-resident in the specified circumstances as provided below; or

(3) To a person who buys such goods or services or both using internet protocol address located in India.




Non-chargeability of equalization levy on e-commerce supply or services:


The equalization levy shall not be charged—

(1) Where the e-commerce operator making or providing or facilitating e-commerce supply or services has a permanent establishment in India and such e-commerce supply or services is effectively connected with such PE;

(2) Where the equalization levy is leviable under section 165; or

(3) Sales, turnover or gross receipts, as the case may be, of the e-commerce operator from the e-commerce supply or services   made or provided or facilitated is less than 2 crores during the previous year.


 

Meaning of "Specified circumstances"

(1) Sale of advertisement, which targets a customer, who is resident in India or a customer who accesses the advertisement though internet protocol address located in India; and

(2) Sale of data, collected from a person who is resident in India or from a person who uses internet protocol address located in India.


Consideration received or receivable from e-commerce supply or services would include:

(1) Consideration for sale of goods irrespective of whether the e-commerce operator owns the goods. 


However, it shall not include consideration for sale of such goods which are owned by a person resident in India or by a permanent establishment in India of a person non-resident in India, if sale of such goods is effectively connected with such permanent establishment;


(2) Consideration for provision of services irrespective of whether service is provided or facilitated by the e-commerce operator.


 However, it shall not include consideration for provision of services which are provided by a person resident in India or by permanent establishment in India of a person non- resident in India, if provision of such services is effectively connected with such permanent establishment.


Failure to credit equalisation levy to the account of the government:

Interest on delayed payment of equalisation levy an assessee or e-commerce operator who fails to credit the equalisation levy or any part thereof within the period specified u/s 166 or 166a, to the account of the central government, has to pay simple interest at the Rate of 1% of such levy for every month or part of a Month by which such crediting of the tax or any part thereof is delayed.

 


Penalty for failure to deduct or pay equalisation levy:


1. Failure to deduct whole or part of equalisation levy u/s 166:

In addition to payment of equalisation 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 leviable

2. Failure to pay whole or part of equalisation levy as required u/s 166a:

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.

3. Failure to remit equalisation levy to the central government on or before 7th of    the following month, after deduction of the same u/s 165(1):

In addition to paying the  equalisation levy on specified services u/s 166(2) and interest u/s 170, a penalty of  1,000 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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