What is Equalisation Levy? | E-Commerce | Amazon | Facebook | Google - Enterslice

#EqualisationLevy is a tax on digital transaction by #Ecommerce companies (for e.g. Facebook, Google, Amazon). #Equalisation Levy (EL) was introduced under the Finance Act 2016.

What is covered under Equalisation levy?

Consideration for online advertisement services, earned by non-residents from an Indian resident carrying on business exceeding Rs. 1 lac were charged at 6% of consideration.
Now, #FinanceAct, 2020 expanded the scope of the EL, to include all non-resident e-commerce operators providing ‘e-commerce supply or services. So from 1st April 2020, a non-resident e-commerce operator (e.g. Amazon) is liable to pay EL at the rate of 2% on the consideration received/receivable from e-commerce supply or services.

But, The EL 2.0 does not apply to transactions already covered by the EL under Finance Act 2016. EL 2.0 is applicable on the online sale of goods or online provision of services or a combination of both by the non-resident e-commerce operator (#Amazon).

EL 2.0 is applicable where non-resident e-commerce operators supply to person resident in India; or Person using an Indian IP address; or Even Non-resident in specific cases. Threshold limit and #Tax rate. If amount received for specified services is more than Rs. 2crores. Then Tax at the rate of 2% of consideration received / receivable is to be charged.

Due Dates for #Compliance Tax deducted is required to be deposited by 7th of next month. For e.g. tax deducted in October, is to be deposited by 7th of November. Also a statement for the same is to be furnished in Form no. 1 by 30th June of Financial Year ended. For e.g. For FY 2020-21, Equalisation Levy Statement (Form-1) is to be submitted by 30 June 2021.

What happens if you do not comply with this provisions:

Consequences of Delayed Payments

A. Interest For delay in Payment-Interest @ 1% of the outstanding levy for every month or part thereof is delayed.
B. Penalty for failure of payment-EL not deducted: Penalty=levy not deducted (alongwith interest and deposit of levy).
EL not deposited: Penalty=Rs.1000/day max upto levy amount (alongwith interest and deposit of levy).
C. Penalty for Statement (Form1 ) not furnished: INR 100/day for each day the non-compliance continues.
D. Prosecution for False statement furnished: Imprisonment upto 3 years and fine.

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