In 2016 Finance Act has introduced a tax called ‘’Equalisation Levy” in Income tax act mainly to cover transactions of e-commerce. The purpose behind the introduction of this tax appears to be to bring within the tax transactions whose source of income is in india and the benefit is received by the service recipient in india though the service provider is outside india.
Let’s understand how it is applied in business and what are the important things to remember.
* Equalisation Levy is charged on Online advertisement or Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;
* The levy will be applicable on the payments received by a non-resident service provider from an Indian resident or an Indian Permanent Establishment (‘PE’) of a nonresident,
* The levy is applicable only on B2B transactions if aggregate value exceeds Rs.1,00,000 in a year.
* Who has to pay Levy- Resident person and foreign company (having a PE in India)
* Currently applicable rate is 6% on gross consideration paid
* The annual statement has to be submitted on or before 30th June of financial year ended.