Hi,
As everybody know that government has launched an Equalisation levy act on advertising services since Jun'16.
Law says advertising service consumer based in India should to deduct 6% Levy on total invoice and make payment to service provider based outside india. However, company's like Google does not permit to do this as they have an agreement saying that all the Laws and Regulations pertaining to a country are to be followed by the service consumer. In this case government has said that service taker should bear this cost.
My Question is :- If my company is ready to bear the levy what will be the calculation to make levy payment to Government?
While making payment to foreign entity we need to fill 15 Ca Cb forms and also some other forms, where we have to mention amount paid and TDS deducted(deduction of levy is considered as TDS).
Here is an example :-
Rs. 10,00,000.00 payable to Google
In ideal situation we should be deducting Rs. 60,000.00 and making a payment of Rs, 9,40,000.00 to Google and Rs. 60,000.00 to government. However as Google is not ready to except this law. We are making a payment of Rs, 10,00,000.00 to Google Grossing up amount by adding 6% which comes to 10,60,000.00 and then make a payment of Rs. 63,600.00 to governement.Which i think is not the right way.
I think if google is not accepting the levy and we are ready to bear the levy any ways we should be paying Rs. 60,000,.00 to goverment and not more than that.
Need your expert opinion and guidance on this and most importantly a link for the reference.
Thanks in advance
CAclubindia
