Equalisation Levy as introduced by Union Budget 2016-17

CBDT Notified Equalisation Levy Rules 2016[N. No.38/2016]

Considering the potential of new digital economy and the rapidly evolving nature of business operations it is found essential to address the challenges in terms of taxation of such digital transactions as mentioned above. In order to address these challenges, it is proposed to insert a new Chapter titled “Equalisation Levy” in the Finance Bill, to provide for an equalisation levy of 6 % of the amount of consideration for specified services received or receivable by a non-resident not having permanent establishment (‘PE’) in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India.

A new Chapter VIII titled ‘Equalisation levy’ is inserted in the Finance Bill which will take effect from the date appointed in the notification to be issued by the Central Government.

The salient features of this Equalisation Levy is as under:-

  • It is to tax the e-commerce transaction/digital business which is conducted without regard to national boundaries.
  • The equalization levy would be 6% of the amount of consideration for specified services received or receivable by a non-resident not having permanent establishment (‘PE’) in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India.
  • Specified services 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.
  • No levy if aggregate amount of consideration does not exceed Rs.1 lacs in any previous year.

Equalisation Levy as introduced by Finance Bill 2016 in Union Budget 2016-17

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