Section 163 of Finance Act 2016: This chapter extends to the whole India except J&K.
Section 165 (1) of Finance Act 2016: Charge of Equalisation Levy (EL)
Equalisation Levy @ 6% applicable if payment for specified services (#) received / receivable by Non-resident from-
a) A person resident in India & carrying Business or Profession
b) Non- resident having permanent establishment in India
Section 165 (2) of Finance Act 2016: Equalisation Levy not applicable if:
i) Non-Resident having permanent establishment in India & services connected with such permanent establishment OR
ii) Aggregate amount received or receivable by Non-resident from payer is up to 1,00,000 in P.Y.
iii) Where the payment for the specified services by person resident in India, or Non- resident having permanent establishment in India is not for the purpose of carrying out business or profession.
(#) Specified service means:-
a) Online advertisement
b) Any provision of digital advertisement space or any other facility or services for the purpose of online advertisement.
Section 165A (1) of Finance Act 2020 (Newly inserted)
There shall be charged an equalisation levy @ 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—
i) To a person resident in India OR
ii) to a non-resident in the specified circumstance:-
– sale of advertisement, which targets a customer, who is resident in India or a customer who accesses the advertisement though 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 internet protocol address located in India.
iii) to a person who buys such goods or services or both using internet protocol address located in India.
Section 165A (2) of Finance Act 2020: Equalisation Levy not applicable if:
i) where the e-commerce operator making or providing or facilitating e-commerce supply or services has a Permanent Establishment in India and such e-commerce supply or services is effectively connected with such Permanent Establishment;
ii) where the equalisation levy is leviable under section 165 (i.e. already leviable @ 6%); or
iii) sales, turnover or gross receipts of the e-commerce operator from the e-commerce supply or services made or provided or facilitated is less than 2 crore rupees during the P.Y.
(##) E-commerce operator means:- a non-resident who owns, operates or manages digital or electronic facility or platform for online sale of goods or online provision of services or both;
E-commerce supply or services:
i) online sale of goods owned by the e-commerce operator;
ii) online provision of services provided by the e-commerce operator; or
iii) online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
iv) any combination of activities listed in clause (i), (ii) or clause (iii)
Section 166 of Finance Act 2016: Collection and recovery of Equalisation Levy (In case of Specified services)
Every resident person carrying on Business or profession or a Non-Resident having permanent establishment in India shall deduct Equalisation Levy from the amount paid/payable to Non-Resident @ 6% if aggregate amount of consideration for specified services is more than Rs. 1,00,000 in P.Y.
Equalisation levy deducted shall be deposited to CG up to 7th of next month.
Note:- If any person fails to pay equalisation levy on due date, shall be liable to pay interest @ 1% per month or part of month u/s 170 of Finance Act 2016.
Section 166A of Finance Act 2020 (In case of e–commerce supply or services):- Equalisation levy shall be paid by e-commerce operator to the CG in following manner:-
Quarter ended Due date of payment
30th June 7th July
30th September 7th October
31st December 7th January
31st March 31st March
Penalty in case of failure to deduct and pay equalization levy:-
Fails to deduct- 100% of EL that assessee failed to deduct
Fails to pay- In addition of levy, penalty of Rs. 1000 per day during which failure continues, but penalty shall not be exceed the amount of Equalisation Levy.
Section 167 of Finance Act 2016:- Furnishing of Statement (Return Filing)
Return shall be filed in Form 1 on or before 30th June of immediately following F.Y.
In case of assessee fails to file return within time limit or noticed any mistake may file belated/revised return. Such belated/revised return has to be furnished within 2 Years from the end of of F.Y. in which specified services was provided.
Note:-Penalty in case of late filing of Return – Rs. 100 per Day during which such failure continue.
Non compliance of the provision of equalization levy:- If Equalisation Levy on specified services has not been deducted or deducted but not paid to CG up to due date of ROI, then such payment in respect of specified services shall be disallowed u/s 40(a)(ib) under PGBP.