THE
Government has introduced equalization levy of 6 per cent on online
advertisers. The Finance Act, 2016 had inserted a separate Chapter VIII
titled ‘Equalization Levy' in order to tap tax on income accruing to
foreign e-commerce companies from India. It was provided that a person
making payment exceeding in aggregate 1 lakh rupees in a year, to a non
resident, who does not have a permanent establishment in India, as
consideration for online advertisement, will withhold tax at 6% of gross
amount paid, as Equalization levy with effect from 1st June, 2016.
Further the levy will only apply to Business to Business transactions.
This is levied in line with the Organisation for Economic Co-operation
and Development's Base Erosion and Profit Shifting project to tax
e-commerce transactions.
The
revenue accrued for the Government exchequer through the equalization
levy amounts to 146.5 Crore rupees from 1st June 2016 to 3rd December
2016.
This was stated
by Mr Santosh Kumar Gangwar, Minister of State in the Ministry of Finance
in written reply to a question in Lok Sabha yesterday.
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