IT – Equalisation Levy

The Finance Act, 2016 introduced a new Chapter VIII called Equalisation Levy (EL) and comes into force from 1st June, 2016.

Definitions

"Equalisation Levy" means the tax leviable on consideration received or receivable for any specified service under the provisions of this Chapter.

"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.

"Prescribed" means prescribed by rules made under this Chapter.

"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.

Charge of Equalisation Levy

An Equalisation Levy is applicable at the rate of six per cent of the amount of consideration for any specified service received or receivable by a person, being a non-resident from—

1. A person resident in India and carrying on business or profession; or
2. A non-resident having a permanent establishment in India.

Exceptions to the above:

1. The non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;
2. The aggregate amount of consideration in a previous year does not exceed one lakh rupees; or
3. 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.

Collection and recovery of Equalisation Levy

Payment of EL: The Equalisation Levy so deducted during any calendar month shall be paid by the seventh day of the month immediately following the said calendar month by remitting into Reserve Bank of India, State Bank of India or any bank authorised for the purpose along with Equalisation Levy Challan.

Failure to deduct: Any assessee who fails to deduct the levy, be liable to pay the levy himself in addition to interest and penalty.

Furnishing of statement:

Due date for statement: Every assessee shall, by 30th June after the end of each financial year, prepare and deliver a statement in Form 1, duly verified in the manner indicated and furnished in the following manner:-

1. Electronically under digital signature; or
2. Electronically through electronic verification code

Interest on delayed payment of Equalisation Levy

Failure to pay the Equalisation Levy, shall be liable to pay simple interest at the rate of one per cent of such levy for every month or part of a month.

Penalty for failure to deduct or pay Equalisation Levy

Any assessee who —

Fails to deduct the whole or any part of the Equalisation Levy will be liable to pay a penalty equal to the amount of Equalisation Levy that he failed to deduct.

Or after deducting, fails to pay, in addition to paying the levy and interest, a penalty of one thousand rupees for every day during which the failure continues, 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 statement

Where an assessee fails to furnish the statement within the time, shall be liable to pay a penalty of one hundred rupees for each day during which the failure continues.

Penalty not to be imposed in certain cases

No penalty shall be imposable for any failure referred to in the said sections, if the assessee proves to the satisfaction of the Assessing Officer that there was reasonable cause for the said failure. Further, assessee shall be given a reasonable opportunity of being heard.