Equalisation Levy

Taxation
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August 26, 2020

Equalisation Levy came into force in the year 2016, which extends to whole of India except the state of Jammu & Kashmir. It is a form of direct tax which was introduced with an intent to tax those transactions in which specified services are provided online.

Services Covered	i. Online advertisement ii. Any provision for digital advertising space or any other facility or service for the purpose of online advertisement, and iii. includes any other service as may be notified by the Central Government in this behalf
Applicability and Collection of Equalisation Levy	Equalisation levy is applicable when the consideration is received by a non-resident from i. A resident carrying business/profession in India ii. A non-resident having a permanent establishment in India, where permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. And the annual payment made to non-resident service provider exceeds Rs. 1, 00,000.
Charge of Equalisation Levy	The rate of tax at which equalisation levy shall be deducted is 6% of the amount of consideration payable/paid to service provider.
Recovery Of Equalisation Levy	The amount of equalisation levy deducted by the resident during a month shall be deposited by the 7^th of the month immediately following the said calendar month.
Furnishing of Statement	Every assesse shall furnish an annual statement, “Equalisation Levy Statement” in FORM-1 on or before 30^th June of next financial year in respect of the services availed.
Interest On Delayed Payment Of Equalisation Levy	In case the assesse fails to pay the amount of levy within the prescribed time period, he shall pay simple interest at the rate of 1% of such levy for every month or part thereof.
Penalty	i. For failure to deduct or pay equalisation levy a) Levy not deducted: Penalty shall be equal to the amount of levy (100% of levy) failed to be deducted b) Levy deducted, but not deposited within prescribed time: Penalty shall be equal to Rs. 1,000 per day for such delay subject to maximum of the amount of equalization levy. ii. For failure to furnish statement If an assessee fails to furnish the annual statement then he shall be liable to pay a penalty of Rs. 100 per day for each day during which the failure continues. iii. No penalty shall be imposed if the assessee provides a reasonable cause for such failure to the Assessing Officer.
Punishment for false statement	If an assessee furnishes a false statement, he shall be punishable with fine and imprisonment, which may extend to three years.
Appeal	i. To commissioner of income tax: The aggrieved assessee on whom penalty is imposed may appeal to the Commissioner of Income-Tax within 30 days from the receipt of such order. ii. To appellate tribunal: If not satisfied by the decision of Commissioner of Income-Tax, the assessee can make an appeal to Appellate Tribunal against such order.

Applicabilty of equalisation levy to e-commerce operator
As per the amendments made through Finance Act, 2020 equalisation levy shall also be applicable to services provided by e-commerce operator, where:

E-commerce operator means a non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or online provision of services or both.
E-commerce supply or services means:
- Online sale of goods owned by the e-commerce operator, or
- Online provision of services provided by the e-commerce operator, or
- Online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
- Any combination of the above.
Equalisation levy is applicable when the supply or services are provided to
- A person resident in India;
- A non-resident in the specified circumstances (sale of advertisements targeted at person resident in India or using internet protocol address in India); and
- A person who buys such goods or services or both using internet protocol address located in India
An equalization levy of two percent shall be chargeable of the amount of consideration received/receivable by the e-commerce operator.
Equalisation levy shall not be charged in the following cases:
- Where e-commerce operator has a permanent establishment in India;
- Sale / turnover / gross receipts of e-commerce operator from such services or supply is less than two crore rupees during the previous year; and
- Where equalisation levy is applicable at a rate of 6%.
The amount of equalisation levy deducted by the e-commerce operator shall be deposited on quarterly basis

Quarter	Due date
April to June	7^th July
July to September	7^th October
October to December	7^th January
January to March	31^st March

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