Equalization levy
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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.