Answer: Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient.
Enrich Your Learning:
- Equalisation Levy was introduced in India in 2016, with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India.
- It is aimed at taxing business to business transactions.
Applicability of Equalisation Levy:
- Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:
- The payment should be made to a non-resident service provider;
- The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.
Services Covered Under Equalisation Levy:
- Currently, not all services are covered under the ambit of equalisation Levy. The following services covered:
- Online advertisement;
- Any provision for digital advertising space or facilities/ service for the purpose of online advertisement