CA Harshal Sevak
Quick Summary
Introduction: Equalisation levy was initially brought to impose tax on online advertisement including provision of digital advertising space on certain entities which did not have any physical presence in India but which earned revenue from Indian advertisers. The levy required every resident mak
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FAQ :
The Equalisation Levy was initially introduced to tax online advertisements and the provision of digital advertising space by entities without a physical presence in India, earning revenue from Indian advertisers. It was often referred to as the 'Google Tax'.
The Finance Act 2020 introduced a new 2% Equalisation Levy on consideration received by 'e-commerce operators' for e-commerce supply of goods or services, broadening its scope beyond just online advertisements to include B2C transactions.
An 'e-commerce operator' is defined as a non-resident who owns, operates, or manages a digital or electronic facility or platform for the online sale of goods, online provision of services, or both.
The levy applies to e-commerce supplies or services made or provided or facilitated on or after April 1, 2020, when they are made to a resident in India, a non-resident in specified circumstances (like targeted advertising), or a person using an Indian IP address to buy goods or services.
Yes, the levy is not charged if the e-commerce operator has a permanent establishment in India and the supply is connected to it, if the levy is already applicable under existing provisions for specified services, or if the operator's sales, turnover, or gross receipts are less than two crore rupees in the previous year.
The responsibility for depositing the tax lies with the e-commerce operator, who is typically a non-resident.
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