Regarding Equalization Levy for Facebook/Google/Bing Ads with Indian Accounts.

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Gaurab Das

Internet Marketing

28 Points Posted on 24 June 2020

Regarding Equalization Levy for Facebook/Google/Bing Ads in India.

Do we need to pay Equalization Levy even if we run ads from Indian FB/Google/Bing ads account and incur GST in invoice.from their Indian Address .

As per various Internet sources (ex reference video below ) , Its mentioned that FB /Google doesn't have permanent establishment (PE) in India and are subsidiaries in India ...So we need to pay Equalization levy @ 6% direct tax if ad expense exceeds 100000.
https://www.youtube.com/watch?v=h4aDVCAzJWI

Would be great if you can let me know your take .

Replies (4)

Quick Summary

This discussion explores whether Indian businesses need to pay the Equalisation Levy on advertising expenses with platforms like Facebook, Google, and Bing. The core question is whether these platforms, despite having Indian entities and charging GST, constitute a 'permanent establishment' (PE) in India. While some sources suggest the levy applies if ad spend exceeds ₹100,000 and there's no PE, the Indian billing and GST registration complicate determining PE status. The consensus leans towards deducting the 6% levy if the payment threshold is met, even with Indian invoices, as platforms may disable accounts or flag advertisers as defaulters if it's not.

David

article Assistant

470 Points Posted on 24 June 2020

Yes. Equalisation levey of 6% is to deducted from the payment made to non-residents not having permanent establishment in India by resident who carries out business or profession, if the amount of consideration exceed Rs. 1L in any previous year in services like online advertisement, digital advertising space, etc

Gaurab Das

Internet Marketing

28 Points Posted on 24 June 2020

But the invoice which factors in GST as well says Google India, facebook India and Bing India are all having Indian offices and charging from India......How do we know that these are not permanent establishments in India.

Constitution of the company is not shared with the advertisers and Hence it cannot be articulated whether these are permanent residents or not.

David

article Assistant

470 Points Posted on 24 June 2020

Hlo, my views as follows,
PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on..In case of E-commerce transactions we cannot say that if the existence of website in the host country or existence of server in the host country can constitute a PE. Because server can easily moved to other locations..

Merly because of GST registration we cannot say that they have PE... GST is a different act and their provisions are different..
So in My opinion if the payment exceed Rs. 1,00,000, you have to deduct 6% and balance should pay. Eg for payment of Rs 1 lakhs, deduct 6000 and pay 94,000.

Gaurab Das

Internet Marketing

28 Points Posted on 27 June 2020

Facebook disables the account if equalization levy is deducted and names the advertiser as defaulter.

Morever My question was different.....How will the advertiser know the constitution of the platform in which he is advertising to reach the target audience....By Constitution I mean whether its a PE or not in India. Becasue the billing happens from India.