Question

Q. The Equalisation levy often seen in the news refers to which of the following?

• A. A form of digital tax on non-resident companies
• B. Proposal of OECD to bring parity in the corporate tax
• C. Indirect tax on imported goods to protect domestic industry
• D. None of the above

Answer 1

The correct option is A A form of digital tax on non-resident companies

Explanation:

• Equalization levy was introduced to tax payments for digital advertisement services which were received by non-resident companies without a permanent establishment in the country. It was designed to provide a level playing field for resident marketplaces or providers who are subject to Indian income taxes.
• India first introduced an equalization levy in 2016, when it charged 6 percent of consideration for online advertisement services, earned by non-residents from an Indian resident carrying on a business. The 2020 Budget substantially extended the scope of the equalization levy. The Equalisation Levy introduced by the Finance Act 2016, was charged at 6% on certain online advertising and related services. The Finance Act 2020 amended the Finance Act 2016, introducing a new Equalisation Levy at 2% on the consideration received/receivable by an e-commerce operator from the following transactions (e-commerce supply or services):
  • Online sale of goods owned by the e-commerce operator; or
  • Online provision of services provided by the e-commerce; or
  • Online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
  • Any combination of the above-mentioned activities