Applicability of Equalisation Levy under Section 165 & 165A

Applicability of Equalisation Levy as per section 165:

-Where service provider is a Non Resident.

-Service Recipient is Resident in India and Carrying business or profession

-Amount of Consideration exceeding Rs 1 Lakhs in a P.Y.

-Services used in India for carrying out business or profession.

Applicability as per Section 165A:

• Service provider/Seller of goods is Non Resident E-Commerce Operator (E-commerce supply or services)
• Service Recipient/ Buyer of goods is a Resident in India.
• Sales/Turnover/gross receipts of E- commerce operator exceeding Rs 2 crore During P.Y.

Services covered under Equalisation Levy : 

The following services are covered under Section 165: ~

• Online advertisement
• Any provision for digital advertising space or facilities service for the purpose of online advertisement.

The following services are covered under Section 165A: ~

• Online sale of goods owned by the e-commerce operator; or
• Online provision of services provided by the e-commerce operator; or
• Online sale of goods or provision of services or both, facilitated by the e-commerce operator; or
• Any combination of activities listed in clause above

Rate of Tax : 

The applicable rate of tax is 6% of the gross consideration to be received or receivable under Section 165.

The applicable rate of tax is 2% of the gross consideration to be received or receivable under Section 165A.

Due Date for Deposit : 

Section 165:~

The equalisation levy so deducted during any calendar month shall be paid by every assessee by the seventh day of the month immediately following the said calendar month.

The equalisation levy so deducted during any calendar quarter shall be paid by every assessee by the seventh day of the month immediately following the said calendar quarter , except for the quarter 4 where the service recipient need to deposit on 31^st March.

Consequences of Delayed Payments : 

Interest is charged at 1% of the outstanding levy for every month or part thereof is delayed.

Non-Applicability of Equalisation Levy : 

For services under Section 165: ~

• The NR providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment;
• The aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a permanent establishment in India, does not exceed one lakh rupees; or
• Where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession.

For the services under Section 165A: ~

• Where the e-commerce operator making or providing or facilitating e-commerce supply or services has a permanent establishment in India and such e-commerce supply or services is effectively connected with such permanent establishment;
• Where the equalisation levy is leviable under section 165; or
• Sales, turnover or gross receipts, as the case may be, of the e-commerce operator from the e-commerce supply or services made or provided or facilitated as referred to in sub-section (1) is less than 2 crore rupees during the previous year.