Equalisation levy is charged in respect of the following:
Sum received or receivable by a non-resident for online advertisement services;
Sum received or receivable by a non-resident e-commerce operator in relation to the supply of goods or services made or facilitated through its e-commerce platform.
However, where the consideration received or receivable is in the nature of royalty or fees for technical services (FTS), no equalisation levy shall be charged if the following conditions are satisfied:
The consideration received or receivable is taxable as royalty or fees for technical services in India; and
Such taxability arises under the Income-tax Act read with the DTAA notified by the Central Government under Section 90 or 90A
Equalisation levy on online advertisement services
When a non-resident provides services in the nature of the online advertisement, provision for digital advertising space, or any other facility or service for the purpose of online advertisement (prescribed services), the recipient of service shall be required to deduct equalisation levy from the consideration paid for such service to such non-resident.
The equalisation levy shall not be applicable if a non resident providingthe services has a PE in India.
The equalisation levy shall be deducted from invoice aomunt at the rate of 6% on the amount of the consideration. The recipient of service should be a person resident of India carrying on business or profession or a non-resident having a Permanent Establishment (PE) in India.
Equalisation levy shall not be charged if the aggregate amount of consideration received or receivable by the non-resident from the recipient of specified services in a previous year does not exceed Rs. 1 lakh.
Equalisation levy on e-commerce supply of goods or services
When an non resident e-commerce operator makes, provides or facilitates any e-commerce supply of goods or services in India, an equalisation levy shall be payable by the e-commerce operator on the consideration received or receivable for such supply or service.
The equalisation levy is charged at the rate of 2% 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-
to a person resident in India; or
to a person who buys such goods or services or both using an internet protocol address located in India; or
to a non-resident in the following circumstances:
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 an internet protocol address located in India.
However, the equalisation levy shall not be charged if the aggregate of the sale, turnover or gross receipts of the e-commerce operator from the e-commerce supply or services made or provided or facilitated to the above persons is less than Rs. 2 crores during the previous year.
Consequence for Non-Deduction of Equalisation levy
An assessee who fails to deduct the levy shall himself be liable for such payment.
If an assessee fails to deduct the equalisation levy or after deduction fails to deposit the same on or before the due date of furnishing return of income, amount paid for such services shall be disallowed under Section 40(a)(ib).
However, if equalisation levy is deducted and deposited in the subsequent year, the aforesaid consideration shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid.
Return of Equalisation Levy
Every assessee or e-commerce operator who has deducted equalisation levy is required to furnished return stating details of equalisation levy on or before 30th June of the financial year immediately following the financial year in which equalisation levy is chargeable.