The proliferation of information and technology has led to a significant escalation in the worldwide distribution and acquisition of digital products and services. It is currently possible to conduct commerce without a physical location. Individuals who conduct commerce electronically can be situated in any part of the world. As a result of digitization, numerous tax challenges have emerged.
As a result, the Finance Act of 2016 imposed an Equalisation Levy on online advertising services, digital advertising space provision, and any other facility or service used exclusively for online advertising. The Finance Act of 2020 has broadened the tax's application to include e-commerce services and products that are rendered, supplied, or facilitated on or after April 1, 2020.
This document covers
When a Non-Resident provides specified services, the recipient of service should pay Equalisation levy on the consideration paid for such service.
When an e commerce operator makes, provides or facilitates any e-commerce supply or services on or after 01st April 2020, such e-commerce operator needs to pay equalization levy on the consideration received for such supply of service.
Note: Online sale of goods and online provision of services shall include Acceptance of offer for sale, Placing of purchase order, Acceptance of purchase order, Payment of consideration, or Supply of goods or provision of services, partly or wholly.
Even if the buyer sends the purchase order by email, it will be treated as online sale of goods.
Note: The consideration received or receivable for specified services and for e-commerce supply or services will not include the consideration which will be taxable as Royalty or Fees for technical services in Income tax act read with DTAA.
The due dates for payment of equalisation levy are as follows
|1||April to June||07th July|
|2||July to Sep||07th October|
|3||October to December||07th January|
|4||January to March||31st March|
Note: Equalisation levy needs to be paid in the challan 285.
Interest: There will be a interest of 1% per month or part month during which such failure continues
Penalty: If the person fails to deposit the amount to Government, he is required to pay a penalty of Rs 1000 per day during which such failure continues. However the maximum penalty will be restricted to total equalisation levy
The persons who has deducted equalisation levy needs to file the statement in Form 1 on or before 30th June of the financial year immediately following the financial year in which the equalisation levy was deducted
For Example, for AY 2023-24, the due date is June 30th 2023
If the person has not filed the equalisation statement in Form 1 within due date, the Assessing officer will serve a notice requiring him to furnish such statement. Such statements needs to be furnished by the taxpayer within 30 days from the date of such notice.
If the person fails to furnish statement, penalty @ Rs 100 per day will be levied upto the date of filing such statement.