EQUALIZATION LEVY

The provisions of Equalization Levy are contained in Chapter VIII of Finance Act,2016 and this Chapter has come into force w.e.f. 1st June, 2016.

Equalization 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.

The Equalization Levy shall not be charged, where-

(i) the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;
(ii) 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
(iii) 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.

Here, “specified service” means 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 in this behalf;

“Permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on;

“Online” means a facility or service or right or benefit or access that is obtained through the internet or any other form of digital or telecommunication network;

Every assess, who fails to credit the Equalization Levy or any part thereof as required to the account of the Central Government within the period specified in that section, shall pay simple interest at the rate of one per cent of such levy for every month or part of a month by which such crediting of the tax or any part thereof is delayed.

Every person, being a resident and carrying on business or profession or a non – resident having a permanent establishment in India shall deduct the Equalization Levy from the amount paid or payable to a non – resident in respect of the specified service at the rate six percent, if the aggregate amount of consideration for specified service in a previous year exceeds one lakh rupees. If assesse fails to deduct or deposit the amount collected as equalization levy, shall be liable to pay penalty.