Equalisation Levy was introduced in the Finance Act, 2016, to charge/ levy tax, on consideration received or receivable on certain specified services like online advertising and marketing service, provided by non-resident service providers to a resident in india or non-resident having a permanent establishment in india. The liability for payment of Equalisation Levy was on the recipient of service.
[For provisions related to Equalisation Levy on Specified Services visit : https://blog.ritulpatwa.com/equalisation-levy-or-google-tax-liability-on-online-digital-advertising-in-india/]
The scope of Equalisation Levy has been expanded by inserting Section 165A in the Part IV of the Finance Act, 2016 i.e. “Equalisation Levy on E-Commerce Supply or Services”.
We are discussing the Frequently Asked Question (FAQs) on Equalisation Levy on E-Commerce Supply or Services below:-
FAQ 1 : What is Equalisation Levy?
Ans 1 : As per the amended Section 164 (d) of the Finance Act, 2016 –
“Equalisation Levy” means the tax leviable on consideration received or receivable for any specified service or e-commerce supply or services under the provisions of the Chapter VIII of the Finance Act, 2016;
FAQ 2 : What is the Date from which Equalisation Levy has been made applicable on E-Commerce Supply or Services?
Ans 2 : 01-04-2020 [New Section 165A(1) of the Finance Act, 2016]
FAQ 3 : Who is liable to pay Equalisation Levy on E-Commerce Supply or Services?
Ans 3 : Equalisation Levy on E-Commerce Supply or Services shall be paid by the E-Commerce Operator [New Section 166A of the Finance Act, 2016]
NOTE : Equalisation Levy is not applicable on www.amazon.in or www.flipkart.com or www.snapdeal.com, as these are Indian Companies – Resident in India and hence not covered under the Definition of E-Commerce Operator as per Section 166A of the Finance Act, 2016.
FAQ 4 : Who is an “E-Commerce Operator”?
Ans 4 : As per new sub-section (ca) of section 164 of the Finance Act, 2016 –
“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;
FAQ 5 : What does E-Commerce Supply or Services mean?
Ans 5 : As per new sub-section (cb) of section 164 of the Finance Act, 2016 –
“E-Commerce Supply or Services” means-
(i) online sale of goods owned by the e-commerce operator, or
(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 (1). (ii) or (1)”.
FAQ 6 : On which Recipient of Service, is the E-Commerce Operator liable to pay Equalisation Levy?
Ans 6 : E-Commerce supply or services made or provided or facilitated by an E-Commerce Operator to the following are liable to Equalisation Levy w.e.f. 01-04-2020:-
(i) to a person resident in india; or
(ii) to a non-resident under the specified circumstances as referred to in sub-section (3) of Section 165A; or
(iii) to a person who buys such goods or services or both using internet protocol address located in india.
[As per new Section 165A(1) of the Finance Act, 2016]
FAQ 7 : What are the “Specified Circumstances” under which Equalisation Levy is applicable on supply or services to Non-Residents?
Ans 7 : For the purposes of new section 165A of the Finance Act, 2016, “specified circumstances” means –
(i) sale of which targets a customer, who is resident in India or a customer who accesses the advertisement though internet protocol address located in India; and
(ii) sale of data, collected from a person Who is resident in India or from a person who uses internet protocol address located in India;
FAQ 8 : What is the Rate Equalisation Levy on E-Commerce Supply or Services?
Ans 8 : 2% of the amount of consideration received or receivable by the E-Commerce Operator from the E-Commerce Supply or Services; [New Section 165A(1) of the Finance Act, 2016]
FAQ 9 : When Equalisation Levy shall not be charged (Exempted) from an E-Commerce Operator?
Ans 9 : The equalisation levy under sub-section (1) of Section 165A of the Finance Act, 2016 shall not be charged,-
(i) where the e-commerce operator making or providing or facilitating e-commerce supply or services has a permanent establishment in India and Sush e-commerce supply or services is effectively connected with such permanent establishment;
(ii) where the equalisation levy is leviable under section 165; or
(iii) sales, turnover or gross receipts, as the case may be, of the e-commerce operator from the e-commerce supply or made or provided or facilitated as referred to in sub-section (1) is less than two crore rupees during the previous year.
[New Section 165A(2) of the Finance Act, 2016]
FAQ 10 : What is the due date for payment of Equalisation Levy by the E-Commerce Operator?
Ans 10 : The due date for payment of Equalisation Levy are as below:-
| Serial Number | Date of ending of the Quarter of Financial Year | Due date Payment of the Financial Year |
| (1) | (2) | (3) |
| 1 | 30th June | 7th July |
| 2 | 30th September | 7th October |
| 3 | 31st December | 7th January |
| 4 | 31st March | 31st March |
FAQ 11 : What is the Interest and Penalty for delay or Non-Compliance of the Equalisation Levy (Google Tax)?
Ans 11 : INTEREST for delay in payment of Equalisation Levy shall be paid @ 1% for the month or part of month for the period of Delay.
PENALTIES are prescribed as below:-
Amended Section 171 of the Finance Act, 2016:-
Any assessee or E-Commerce Operator who–
(a) fails to deduct the whole or any part of the equalisation levy as required under section 166; or
(aa) fails to deduct the whole or any part of the equalisation levy as required under section 166A; or
(b) having deducted the equalisation levy referred to in sub section (1) of section 165, fails to pay such levy to the credit of the Central Government in accordance with the provisions of sub-section (2) of that section, shall be liable to pay,—
(i) in the case referred to in clause (a), in addition to paying the levy in accordance with the provisions of sub-section (3) of that section, or interest, if any, in accordance with the provisions of section 170, a penalty equal to the amount of equalisation levy that he failed to deduct;
(ia) in the case referred to in clause (aa), in addition to the levy in accordance with the provisions of that section, or interest, if any, in accordance with the provisions of section 170, a penalty equal to the amount of equalization levy that be falied to pay; and”;
(ii) in the case referred to in clause (b), in addition to paying the levy in accordance with the provisions of sub-section (2) of that section and interest in accordance with the provisions of section 170, a penalty of one thousand rupees for every day during which the failure continues, so, however, that the penalty under this clause shall not exceed the amount of equalisation levy that he failed to pay.
Amended Section 172 of the Finance Act, 2016:-
“Where an assessee or E-Commerce Operator fails to furnish the statement within the time prescribed under sub-section (1) or sub-section (3) of section 167, he shall be liable to pay a penalty of one hundred rupees for each day during which the failure continues.”