TDS Applicability & Equilisation Levy On Advertisement Services Taken Through Facebook, Google And Instagram

These days advertisement made through digital platform is quite popular and convenient for business enterprises. While thinking about digital platform, we go for Google, Facebook, Twitter, Linkedin and Insta etc. As we all know these entities are global companies, they can have a global corporation based in India or global corporation outside India. This can be checked on the basis of Invoice/Bill generated by these entities.

While undertaking advertisement services through Facebook, Google, Twitter, LinkedIn and Instagram by any Indian entity, it is relevant to understand their scope of services and taxability in India.

TDS applicability on their services

Having establishment in India

If these entities have corporation/establishment in India and they are raising Invoices having Pan and registered address situated in India mentioning their GSTIN , then treatment of their advertisement services will be same as services taken from resident in India which is covered under sec 194C of the Income Tax Act, subject to the limit exceed Rs. 30,000 in case of one time payment or aggregate of payment exceed Rs. 1,00,000, then tax is deductible @ 2%.

For e.g

Facebook India Online Services Pvt. Ltd.
DLF Atria Block N, Jacaranda Marg
DLF City Phase II, Gurugram – 122002 Haryana
India

GSTIN:06AABCF5150G1ZZ
PAN: AABCF5150G

Doesn't have establishment in India

If these entities are not having any establishment /corporation in India, but they are providing only online platform / online space to make advertisement, then in such a case it will be considered as services taken from non-resident outside India and tax is deductible u/s 195 of the Income tax act @20% or DTAA rate whichever is applicable.

Applicability of Equalisation levy

Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

• The payment should be made to a non-resident service provider;
• The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

Currently, the applicable rate of tax is 6% of the gross consideration to be paid. Due date of furnishing Equalisation Levy Statement (Form-1) is on or before 30th June of Financial Year ended

In case there is a delay in payment

Interest is charged at 1% of the outstanding levy for every month or part thereof is delayed.

In case there is non-compliance on behalf of the service recipient

The compliance procedure for the Equalisation Levy is the responsibility of the service recipient.

Further, service recipient is also liable to pay GST on reverse charge @ 18%.