Equalisation levy Salient Features

By | May 31, 2016

Equalisation levy

( CHAPTER VIII  of Finance Act 2016)

Equalisation levy

Salient Features of Equalisation levy

  • Equalisation levy shall come into force w.e.f 01.6.2016
  • Equalisation levy is covered in CHAPTER VIII  of Finance Act 2016 ,which extend to whole of India except the State of Jammu and Kashmir.
  • Equalisation levy  shall be charged on any specified service received or receivable by a person. “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;
  • Equalisation levy shall be charged at the rate of six per cent. of the amount of consideration for any specified service received or receivable by a person, being a non-resident from––

    (i) a person resident in India and carrying on business or profession; or

    (ii) a non-resident having a permanent establishment in India.

  • The equalisation levy  shall not be charged, where––

    (a) the non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;
    (b) the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a permanent establishment in India, does not exceed one lakh rupees; or
    (c) where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession.

  • The equalisation levy deducted during any calendar month, shall be paid by every assessee to the credit of the Central Government by the seventh day of the month immediately following the said calendar month. (i.e if equalisation levy deducted in the month of June 2016 , it shall be paid by 7th July 2016)
  • simple interest  Interest on delayed payment of equalisation levy at the rate of one per cent. of such levy for every month or part of a month by which such crediting of the tax or any part thereof is delayed.
  • Penalty for failure to deduct or pay equalisation levy
    • If Assessee fails to deduct the whole or any part of the equalisation levy :-A penalty equal to the amount of equalisation levy that he failed to deduct;
    • If Assessee having deducted the equalisation levy, fails to pay such levy :-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.
  • Dis allowance of Expenses u/s 40(a)(ib) if any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under the provisions of Chapter VIII of the Finance Act, 2016, and such levy has not been deducted or after deduction, has no been paid on or before the due date specified in sub-section (1) of section 139 (i.e due date of filing of return of Income)
  • Equalisation levy, interest and penalty payable should be rounded off nearest multiple of Rs 10
  • Equalisation levy shall be  paid by remitting it into the Reserve Bank of India or in any branch of the State Bank of India or of any authorised Bank accompanied by an equalisation levy challan.
  • Statement of all the specified services chargeable to equalisation levy during any financial year shall be furnished in Form No.1 by any of the following mode :-

    (i) electronically under digital signature; or
    (ii) electronically through electronic verification code.

  • The statement in Form No.1 in respect of all the specified services chargeable to equalisation levy during any financial year shall be furnished on or before the 30th June immediately following that financial year.
  • Penalty for failure to furnish statement in Form No 1, he shall be liable to pay a penalty of one hundred rupees for each day during which the failure continues.
  • No penalty shall be imposable for any failure , if the assessee proves to the satisfaction of the Assessing Officer that there was reasonable cause for the said failure and unless the assessee has been given a reasonable opportunity of being heard.
  • Where an assessee fails to furnish the statement within the time specified in Form No 1, the Assessing Officer may issue a notice to such person requiring him to furnish and  within thirty days from the date of service of the notice statement in Form No 1 shall be furnished by the Assessee.
  • Where any levy, interest or penalty is payable in consequence of any order passed , the Assessing Officer shall serve upon the assessee a notice of demand in Form No. 2 specifying the sum so payable
  • Appeal against the order of Assessing Officer may be filed with Commissioner of Income-tax (Appeals) . Appeal shall be filed in Form No. 3 within a period of thirty days from the date of receipt of the order of the Assessing Officer and shall be accompanied by a fee of one thousand rupees . Appeal can be in the following manner, namely:-

    (i) electronically under digital signature; or
    (ii) electronically through electronic verification code.

  • Appeal to Appellate Tribunal shall be made in Form No.4,. Appeal shall be filed within sixty days from the date on which the order sought to be appealed against is received by the assessee or by the Commissioner of Income-tax, as the case may be. Appeal shall be accompanied by a fee of one thousand rupees.
  • Imprisonment for a term which may extend to three years and with fine in case of person makes a false statement.
  • Prosecution shall be instituted against any person for any offence  with the previous sanction of the Chief Commissioner of Income-tax.

Related Post

  1. Equalisation levy applicability date notified by CBDT
  2. Equalisation levy Rules 2016 notified by CBDT
  3. All about EQUALISATION LEVY on online advertisement
  4. Non payment of equalization levy : Disallowance u/s 40(a)(ib)
  5. Reasons for equalisation levy and rate of equalisation levy in Budget 2016
  6. Equalization Levy : Committee brings clarity

2 thoughts on “Equalisation levy Salient Features

  1. Pingback: No Equalisation Levy on use of Google AdWords | Tax Heal

  2. Pingback: Disallowance for non-payment of equalization levy- Section 40(a)(ib) | Tax Heal

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