Introduced in the Finance Act 2016, an “equalisation levy” at the rate of 6% (on the nonresident companies indulged in the digital advertisement space) sought to address the tax-related challenges by the growing digitization of the Indian economy. Effective from 1 April 2020, the scope has been widened to cover the levy of 2% on consideration received by Ecommerce operators from Ecommerce supply or services.
The provisions of equalisation levy are not a part of the income-tax law which means that the tax treaty benefits may not be available in relation to such levy.
Applicable to:
Applicable on non-resident Ecommerce operators who own, operate or manages a digital or electronic facility or platform for the sale of goods or provision of services (or both) via an online medium.
Applicable on:
The levy is applicable on Ecommerce supply or services including –
Applicable when:
The levy will be applicable when the goods or services are facilitated to either a resident in India or to a person using an IP address located in India or to a non-resident (in respect of the sale of advertisements focussed at residents in India or using an IP address of/in India).
Exclusions:
The equalisation levy shall not be charged when-