Google is one of the biggest search engine company undoubtedly. But it is also one of the biggest advertiser online. Its revenue mainly gets generated from advertisement. Google is shifting its profits to countries where it can pay least or no tax. Many countries want to tax the revenue of Google & have devised a special tax called Google Tax.
Recently Budget 2016 has introduced a similar type of tax called Equalization levy.It is a tax on specific payments made to nonresident for providing online advertisement services or any provision for digital advertising space.
Equalisation levy is charged on the following persons
1. Any service by a resident person in India & carrying on business or profession from a nonresident for online advertisement or any provision for digital advertising space. For example Google provides services of online advertisement in India to any resident person
2. Any service received by a nonresident from another nonresident having a Permanent Establishment (PE) in India.
1. If the Nonresident providing service has a PE in India. For example Google providing service to other branches of the company outside India.
2. The Total amount of service provided is less than Rs 1,00,000 in a year.
3. If the payment made to nonresident outside India is not for purpose of carrying out any business or profession.
The resident individual has to deduct 6% of tax before paying for any services who’s aggregate value is more than Rs 1 lakh per year. The Equalization levy has to be paid within 7th of the following month just like deposit of TDS.
If there is any delay in payment of levy to the government within due date then a interest of 1% per month is levied.
If any assesse fails to deduct the tax then penalty equal to the equalization levy & also Rs 1000 per day till the failure continues.
CBDT has specified Form 1 i.e statement of services for specifying total amount of services provided by Indian resident to Nonresident & the amount of equalization levy, Interest payable.