Equalization levy

Subject: Economy

Context:

Just one week left to pay first installment of the equalisation levy on e-Commerce companies.

Concept:

• Equalization Levy was introduced in India in 2016-2017, with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India.
• Equalization Levy is a direct tax, which is withheld at the time of payment by the service recipient.
• The two conditions to be met to be liable to equalization levy:
• The payment should be made to a non-resident service provider;
• The annual payment made to one service provider exceeds Rs. 1, 00,000 in one financial year.
• The following services covered:
• Online advertisement
• Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;
• Currently the applicable rate of tax is 6% of the gross consideration to be paid.