Description

The central government has proposed the abolition of the Equalisation Levy, commonly referred to as the digital tax, on online advertisements. This move aims to benefit advertisers using platforms like Google and Meta by reducing the tax burden on digital advertising services.

Understanding Equalisation Levy

The Equalisation Levy was introduced in 2016 with the objective of taxing digital transactions and ensuring that foreign e-commerce companies generating income from Indian users contribute to the tax system.

Key Features

• Designed primarily to tax business-to-business (B2B) transactions.

• Often referred to as the “Google Tax”.

• A direct tax that is deducted at the time of payment by the service recipient.

Applicability Criteria

A transaction becomes subject to the Equalisation Levy if it meets both of the following conditions:

• The payment is made to a non-resident service provider.

• The total annual payment to the same service provider exceeds Rupees 1,00,000 in a financial year.

Services Covered Under Equalisation Levy

Currently, not all digital services fall under the scope of this levy. However, the following are taxable under the existing framework:

• Online Advertisement Services (Implemented from June 1, 2016).

• Digital advertising space, sale of goods, or provision of services to Indian residents or users accessing services via Indian IP addresses (Implemented from April 1, 2020).

• Additional services may be included in the future as per government notifications.

Exemptions From Equalisation Levy

The Equalisation Levy does not apply in the following cases:

• If the non-resident service provider has a permanent establishment in India and the transaction is linked to that establishment.

• If the total transaction amount for the service is less than Rupees 1 lakh.

• If the service is not used for commercial or professional purposes.

• To prevent double taxation, income arising from specified services on which the levy has been charged is exempt under Section 10(50) of the Income Tax Act.

• If the payment qualifies as royalty or technical service fees, it is taxed separately and is not subject to the Equalisation Levy.

Tax Rates Under Equalisation Levy

• 6% on gross consideration for specified digital services, such as online advertisements.

• 2% on gross consideration for e-commerce transactions, including online sales of goods or services.

Impact Of Removing Equalisation Levy

The government’s proposal to abolish the Equalisation Levy on online advertisements is expected to:

• Reduce the cost of digital advertising for Indian businesses.

• Encourage foreign digital platforms to expand their services in India without additional taxation hurdles.

• Streamline India’s digital tax policies in alignment with global tax frameworks.

By eliminating this tax, the government aims to foster a more business-friendly digital economy, making it easier for advertisers and foreign digital firms to operate in India’s growing online marketplace.

Welcome to Notopedia.com, your free learning platform that caters to the diverse needs of students and aspirants across a spectrum of entrance exams and educational endeavors. Whether you're preparing for highly anticipated exams like CAT 2023, NEET 2023, JEE Main, or bank job vacancies, our platform offers a wealth of resources to guide you towards success. Stay up-to-date with the latest exam dates, announcements, and results for various government recruitment exams, including SSC CGL, CHSL, NDA, and UPSC. Explore comprehensive study materials, sample papers, and exam patterns to hone your skills and boost your confidence. From important dates like CBSE Class 10 and 12 date sheets to exam-specific information like JEE Main 2023 application form date, we cover it all. Notopedia.com is your go-to source for everything from admissions and admit cards to scholarships and college information. Whether you're aiming for a career in defense, government, banking, or higher education, our free learning platform equips you with the knowledge and resources you need to excel. Join us in your educational journey and unlock a world of opportunities, guidance, and comprehensive support.

For more Updates and Information - Visit Notopedia's Bulletin Board

For Latest Sarkari Jobs - Visit Notopedia's Sarkari Jobs Section

For access to more than 20,000 Colleges - Visit Notopedia's College Section

For School Studies and Exams Preparation across 14 Boards - Visit Notopedia's School Section

For Comprehensive Preparation of Sarkari Job Exams - Visit Notopedia's Sarkari Exams Section

For Comprehensive Preparation of Competitive Exams - Visit Notopedia's College Entrance Exams Section