Equalisation Levy Under Income Tax Act – Complete Guide
Table of Contents
- Charge of equalisation levy on specified services
- Charge of equalisation levy on e-commerce supply of services
- Collection and recovery of equalisation levy on specified services
- Due date of payment of Equalisation Levy
- Interest on delayed payment of equalisation levy.
- Penalty for failure to deduct or pay equalisation levy
- Penalty for failure to furnish a statement
Charge of equalisation levy on specified services
As per section 165 of the Income Tax Act, equalisation levy shall be charged at the rate of six percent of the amount of consideration for any specified service received or receivable by a person, being a non-resident from—
(i) | a person resident in India and carrying on business or profession; or | |
(ii) | a non-resident having a permanent establishment in India. |
“Specified Service” means an online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government on this behalf.
The equalisation levy shall not be charged, where—
(a) | the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment; | |
(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 permanent establishment in India, does not exceed one lakh rupees; or | |
(c) | where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession. |
Charge of equalisation levy on e-commerce supply of services
Equalisation levy shall be charged at the rate of two percent. of 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—
(i) | to a person resident in India; or | |
(ii) | to a non-resident in the specified circumstances or | |
(iii) | to a person who buys such goods or services or both using an internet protocol address located in India. |
“Specified circumstances” mean sale of advertisement, which targets a customer, who is resident in India or a customer who accesses the advertisement through an internet protocol address located in India; and sale of data, collected from a person who is resident in India or from a person who uses internet protocol address located in India
The equalisation levy shall not be charged—
(i) | 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 permanent establishment; | |
(ii) | where the equalisation levy is leviable under section 165; or | |
(iii) | 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 as referred to in sub-section (1) is less than two crore rupees during the previous year. |
Collection and recovery of equalisation levy on specified services
Every person, being a resident and carrying on business or profession or a non-resident having a permanent establishment in India shall deduct the equalisation levy from the amount paid or payable to a non-resident in respect of the specified service at the rate specified in section 165 if the aggregate amount of consideration for specified service in a previous year exceeds one lakh rupees.
The equalisation levy so deducted during any calendar month shall be paid by every assessee to the credit of the Central Government by the seventh day of the month immediately following the said calendar month.
Any assessee who fails to deduct the levy be liable to pay the levy to the credit of the Central Government.
Due date of payment of Equalisation Levy
The equalisation levy referred to in sub-section (1) of section 165A, shall be paid by every e-commerce operator to the credit of the Central Government for every quarter of the financial year. The due dates of payment are given below:-
SL NO. | Date of ending of the quarter of the financial year | Due date of the financial year |
1. | 30th June | 7th July |
2. | 30th September | 7th October |
3. | 31st December | 7th January |
4. | 31st March | 31st March |
Interest on delayed payment of equalisation levy.
Every assessee or e-commerce operator, who fails to credit the equalisation levy to the account of the Central Government within the period specified, shall pay simple interest at the rate of one percent 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.
Any assessee or e-commerce operator who—
(a) | fails to deduct the whole or any part of the equalisation levy as required under section 166; or | |
(aa) | fails to pay the whole or any part of the equalisation levy as required under section 166A; or | |
(b) | having deducted the equalisation levy fails to pay such levy to the credit of the Central Government in accordance with the provisions of the section, | |
shall be liable to pay,— |
(i) | in the case referred to in clause (a), in addition to paying the levy in accordance with the provisions of sub-section (3) of that section, or interest, if any, in accordance with the provisions of section 170, a penalty equal to the amount of equalisation levy that he failed to deduct; | |
(ia) | in the case referred to in clause (aa), in addition to the levy in accordance with the provisions of that section, or interest, if any, in accordance with the provisions of section 170, a penalty equal to the amount of equalisation levy that he failed to pay; and | |
(ii) | in the case referred to in clause (b), in addition to paying the levy in accordance with the provisions of sub-section (2) of that section and interest in accordance with the provisions of section 170, a penalty of one thousand rupees for every day during which the failure continues, so, however, that the penalty under this clause shall not exceed the amount of equalisation levy that he failed to pay. |
Penalty for failure to furnish a statement.
Where an assessee or e-commerce operator fails to furnish the statement within the time prescribed under sub-section (1) or sub-section (3) of section 167, he shall be liable to pay a penalty of one hundred rupees for each day during which the failure continues.