Equalization levy

Grossing up shall be done. 100000*100/94= 106383.
U will have to show that above amt is due to fb. and u hav dedct 6383. & remit 1lc to fb. U will get dedc of 106383 if u pay eq lvy before due date of filing of return of the py in whch u paid payment to fb. Above amount will be exempt from tax in india in the hands of fb inc. Mind it payment after /on 1-7-2016 will attract only eq lvy.

Hope you are clear on this.

Thank you sir

But under which sections or rules says that this should be gross up, kindly note that section or rules. Whether tax expneses paid by company is allowed as expenses under "PGBP" ?

i dont think that any section says to do grossing up.. it is like we need to deduct 6% of equilisation levy of the amount of consideration. nw suppose the fees that has to be paid to fb is 10lacs we need to charge equlisation levy of 60000 and thn make the balance payment of 9.4 lacs to fb. bt FB will insist on payment of 10 lacs only. so because of that we need to do grossing up. or else the entire amount will be disallowed. moreover interest @ 1% will be levied u/s 170 for delay in payng the levy. section 166 says that levy has to be paid to cg within 7th day of the next month whn such levy was deducted. n moreover i believe penalty u/s 171 will also be levied.

Thank you so much madam,

If we are paying out off pocket of company without grossing up, then the entire expenses is not allowed ? or only eqalization levy only not allowed. Kindly explain.

i dont think that entire amount will be disallowed. i believe only the levy will be disallowed. But still its better to take advise from a person who has expertise in this topic. Bt i would definetly suggest you to ask FB to change the invoice that they will issue to avoid any confusion.

Thank you som much madam...