In past few years, the Digital Ads Like Google, Facebook, Twitter, Linkedin, Yahoo and other advertising concerns has grown rapidly. Moreover, no tax has been applicable on these companies. But Budget 2016 has introduced Equalization Levy @6% on Digital Ads.
There are many digital ads companies which are generating huge revenues from india and they are not liable to pay any income tax in india even though they don’t have any permanent establishment in India. The Budget 2016 introduce “Equalization Levy @6%” on specified services which are provided by Non Resident Service Providers to Indian Residents.
1. Applicability of Equalisation Levy
a) Equalisation Levy has extends to the whole India except Jammu and Kashmir. It shall come into force w.e.f 01st June, 2016.
b) Equalisation Levy shall be deducted by every person (the assesse), being
(i) a person resident in India and carrying on business or profession; or
(ii) a non-resident having a permanent establishment in India.
@6% of the amount of consideration for any specified service paid or payable to a person, being a non-resident.
c) “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.
2. Non-Applicability of Equalisation Levy
The equalization levy shall not be charged, where–
(i) the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment
(ii) the value if services, does not exceed one lakh rupees; or
(iii) where the payment for the specified service not for the purposes of carrying out business or profession.
3. Collection and recovery of equalisation levy
The assessee shall be paid to the credit of the Central Government by the seventh day of the month immediately following the calendar month in which amount of Specified services had been paid.
4. Interest on delayed payment of equalisation levy.
Every assessee, who fails to deposit the equalisation levy to Central Government, shall pay simple interest at the rate of one per cent per month of such levy
5. Penalty for failure to deduct or pay equalisation levy
Any assessee who fails to deduct or having deducted but fails to pay such levy to the Central Government, shall be liable to pay,—
(i) a penalty equal to the amount of equalisation levy that he failed to deduct; and
(ii) a penalty of one thousand rupees for every day during which the failure continues not exceed the amount of equalisation levy that he failed to pay.