Equalisation Levy Rules, 2016

Equalisation Levy Rules, 2016

Finance Act 2016 introduced us with Equalisation Levy. Equalisation Levy is a tax that is to be levied on specified service. In this article we shall discuss about it. The expense on which Equalisation Levy is deducted or not but not paid will be disallowed as per section 40(a)(ib) of Income tax act. Specified service has been defined as

• Online advertisement, any provision for digital advertising space or any other facility or service for purpose of online advertisement.

The rate of Equalisation Levy is 6% and it was applicable with effect from 1st June 2016.

Chargeability

Equalisation Levy will be levied if

• A Resident takes specified service from a non-resident.
• A non-resident having permanent establishment takes specified service from another non- resident.

The income received by non-resident after levy of Equalisation Levy will be exempt as per section 10(50). The following Equalisation Levy Rules have been notified by CBDT

Particulars	Equalisation Levy Rules, 2016	Summary
Computation and payment of equalisation levy	Rule 3 and Rule 4	The amount of consideration of specified services, equalisation levy, interest and penalty payable shall be rounded off to the nearest multiple of ten rupees. Equalisation levy deducted during any calendar month is to be paid to the credit of the Central Government by the seventh (7th) day of the month immediately following the calendar month.
Furnishing of statement	Rule 5, Rule 6 and Rule 7	The statement of specified service is required to be furnished electronically in Form No. 1 (verified through either a digital signature or an electronic verification code by an authorised signatory) on or before 30 June immediately following that financial year. The Tax Officer has been empowered to issue show cause notice if return is not filed on time.Where any levy, interest or penalty is payable under the equalisation levy provisions, a notice of demand specified in Form No. 2 shall be served upon the taxpayer.
Filing of appeal against the penalty order before the Commissioner of Income-tax	Rule 8	An appeal against the penalty order shall be electronically filed before the CIT(A) in the prescribed Form No. 3 within thirty (30) days of receipt of the penalty order.
Filing of appeal before the Income tax Appellate Tribunal (Tribunal)	Rule 9	An appeal against the order of the CIT(A) has to be filed in triplicate with the Tribunal within sixty days of date of receipt of the order of CIT(A) in the prescribed Form No. 4.

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