NON-APPLICABILITY OF EQUALISATION LEVY

by Cainindia Delhi Rajput Jain & Associates

·         In the subsequent cases, equalisation levy shall not be applicable under section 165A -

 

ü  The e-commerce operator havingpermanent business establishment in India and their e-commerce supply or services has been extensively connected with such permanent establishment; or

ü  The supplier is providing digital advertising services and is already liable for equilisation levy; or

ü  Where theturnover or gross receipts of e-commerce operator, arising from e-commerce operations, does not exceed Rs. 2 Crores during the relevant previous year.

RATE OF EQUALISATION LEVY UNDER SECTION 165A

The rate of Equalisation Levy is 2% of the amount of gross consideration received or receivable by the e-commerce operator for e-commerce supply or services.

 

PARTICULARS	RATE OF EL
·         NON-RESIDENT E-COMMERCE OPERATOR. ·         RECIPIENT IS RESIDENT IN INDIA. ·         TURNOVER/GROSS RECEIPTS FROM E- COMMERCE OPERATIONS   EXCEEDS RS 2 CRORE DURING P.Y. ·         NOT LIABLE TO EL UNDER SECTION 165.	2% ON THE AMOUNT OF CONSIDERATION RECEIVED OR TO BE RECEIVED.
·         NON-RESIDENT E-COMMERCE OPERATOR. ·          RECIPIENT IS NON-RESIDENTSPECIFIEDIN SUB-RULE (3). ·         TURNOVER/GROSS RECEIPTS FROM E- COMMERCE OPERATIONSEXCEEDS RS 2 CRORE DURING P.Y. ·         NOT LIABLE TO EL UNDER SECTION 165	2% ON THE AMOUNT OF CONSIDERATION RECEIVED OR TO BE RECEIVED.
·         NON-RESIDENT E-COMMERCE OPERATOR. ·         RECIPIENT IS PERSONUSING IP ADDRESS LOCATED IN INDIA. ·         TURNOVER/GROSS RECEIPTS FROM E- COMMERCE OPERATIONSEXCEEDS RS 2 CRORE DURING P.Y. ·         NOT LIABLE TO EL UNDER SECTION 165.	2% ON THE AMOUNT OF CONSIDERATION RECEIVED OR TO BE RECEIVED

 

THRESHOLD LIMIT OF TURNOVER FOR EQUALISATION LEVY UNDER SECTION 165A

·         Equalisation Levy shall be leviable to non-resident e-commerce operator, provided their turnover or gross receipts from such supplies exceeds Rs. 2 crores in a particular previous year.

DUE DATE FOR DEPOSITING EQUALISATION LEVY

·         Equalisation Levy shall be deposited by the e-commerce operator on quarterly basis and the due date for the same is as follows -

Compliance timeline: Payments under the Equalisation Levy 2.0 will be due for every year quarter on the subsequent dates:

 

Quarter	Due date of payment of equalisation levy
April-June	7th July
July-September	7th October
October- December	7th January
January- March	31st March

 

 

DUE DATES FOR COMPLIANCE

·         Due date for furnishing Equalisation Levy Statement (Form-1) will be on and before 30th June of the relevant financial year.

INTEREST PENALTY IN CASE OF DELAY

·         In case of delay in making payment of Equalisation Levy, the e-commerce operator would be susceptible to pay interest @1% per month or part thereof, on the on delayed amount of EL.

 

PENALTY FOR FAILURE

·         If an e-commerce operator fails to pay the entire or any a part of the equalisation levy as needed u/s 166A, he shall be susceptible to pay a penalty up to the amount of equalisation levy that he did not pay.

 

RETURNS TO BE FURNISHED

·         Every e-commerce operator is required to furnish an annual statement of equalisation levy, containing information as per the Form No. 1 and the same shall be filed, on or before 30th June of the relevant assessment year.

·         The said form should be signed and verified using the digital signature or electronic verification code facility.

·         In case of failure to furnish the form within the allotted time -

ü  It would be required to furnish the annual statement in Form No. 1 or revised statement at any time before the expiry of two years from the end of the twelvemonth within which the e-commerce supply or services was made or provided or facilitated.

ü  Where the e-commerce operator fails to furnish annual statement as well, the A.O. might serve a notice, requiring the e-commerce operator to submit the said statement, within 30 days from the date of service of notice.

With the delay in global consent on the Inclusive Framework, the unilateral measures enacted by the Indian government have made the problems posed by the digitalised economy a reality for several companies. From a global tax management point of view, it's essential for companies to consider these equalisation levies as a part of their global tax planning. Thus, it has now become imperative to assess the implications of the Equalisation Levy 2.0, especially in case of combination of tax optimisation opportunitieswith the recent ISC ruling on royalties.

 

However, it is still unclear as to how the affected non-resident businesses could register to comply and the frequency for the filing of the returns.

 

CALCULATION OF TAX BASE

The calculation of the base on which the rate of levy be calculated is still unclear and many arewaitingfor additional information on the same from the tax authority.

For example, in case of payment of GST, it's unclear whether the equilisation levy be paid on the entire amount of the sale or only on the portion of margin.

As the base is unclear there's the chance of double taxation if the platform needs to pay the equalisation levy on the complete amount while the underlying seller is additionally required to pay the levy.

NON-COMPLIANCE BY THE SERVICE RECIPIENT

1.      Penalty for failure of payment

·         Non-deduction of Equalisation Levy: Penalty equal to amount of levy not deducted, along with the interest amount applicable.

·         Non-deposit of Equalisation Levy: Penalty equal to Rs. 1,000 per day, maximum up to the amount of levy not deposited.

·         Such expenditures shall be disallowed within the hands of the payer.

2.      Failure to furnish statement of compliance
Rs 100 per day of default.

 

Prosecution
If a falsity statement has been filed then the person is also subjected to imprisonment of a term of up to three years and a fine. Get more detail at https://carajput.com

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Created on Sep 4th 2021 11:08. Viewed 220 times.

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