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Procedure and Payment of Equalisation Levy

Posted @ December 7, 2017, 12:41 am under (TDS on Certain Payments)

Procedure and Link for Payment of Equalisation Levy:-

Background - Equalisation Levy @ 6% on Digital Ads

“Equalization levy” @ 6% was introduced through Finance Act 2016 on specified services which are availed by Indian Residents from Non Resident providers, in order to recover tax on transactions with Internet Companies not having a permanent establishment in India and thereofre they are not liable to pay any income tax in India. 

This Equalisation Levy of 6% is levied on specified services by Internet companies. The specified service as of now is Advertisement, any provision for digital advertising space, or any other facility or service for online advertisements.


Applicability and Manner of Deduction of Equalisation Levy

The Equalisation Levy would only be applicable if the aggregate amount of consideration for specified services exceeds Rs. 1 Lakh during the year. If the aggregate payment made or expected to be made during the financial year is less than Rs. 1 Lakh – Equalisation levy won’t be applicable in this case.

This levy of Equalisation would be in the same manner as TDS i.e. the person making the payment for Digital Advertisements would be required to deduct Equalisation Levy @ 6% of the Total Payment and deposit the same with the Central Govt. In case of any failure in complying with the provisions of the Equalisation Levy, the amount paid for such services won’t be allowed to be claimed as an expense for income tax purposes.

Link for payment of equalisation levy and select the challan no. ITNS 285.

Equalisation Levy would not be applicable in the following cases:-

1. If the Payment made during the year is less than Rs. 1 Lakhs

2. If the organisation making the payment is registered in Jammu & Kashmir


Annual Return and Deposit of Equalisation Levy with the Govt.

The Equalisation Levy which is to be deducted @6% is required to be deposited with the Govt. within 7 days from the end of the month in which this amount has been deducted. For example: If Equalisation Levy has been deducted in the month of Sept, it is required to be deposited with the Govt on or before 7th Oct.

Challan No./ ITNS 285 is required to be deposited along with the Payment of Equalisation Levy. Equalisation Levy can be deposited online with the govt.

An Annual Return is required to be filed with the Govt stating the Equalisation Levy withheld and the organisations to which the payment has been made. This return is required to be filed annually and is to be filed in Form No. 1 on or before 30th June of the next financial year. This annual return is to be verified either through Digital Signature or through an Electronic Verification Code by an authorised signatory.


Interest on delayed payment of equalisation levy.

Every assessee, who fails to credit the equalisation levy or any part thereof as required under section 166 to the account of the Central Government within the period specified in that section, shall pay simple interest at the rate of 1% of such levy for every month or part of a month by which such crediting of the tax or any part thereof is delayed.




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