Google to pass on 2% equalisation levy to clients whose ads are visible in India
Introduced by the Indian govt in April 2020, the levy will be applicable even if the buyer and the seller are not based in India
“From 1st October 2021, we’ll be adding a surcharge to the invoices we send to non-Indian customers whose ads are viewed in India. The surcharge is to cover part of the costs associated with complying with the Indian Equalisation Levy, which only impacts non-Indian advertisers. We will continue to pay all the taxes due in India and elsewhere,” Google said in a statement.
The Finance Bill 2020 expanded the scope of the equalisation levy to include consideration received by e-commerce operators from e-commerce supply or services, and taxed at a rate of 2%. This levy came into effect from 1 April 2020. An e-commerce operator has been defined as a non-resident that owns, operates or manages a digital or electronic facility or platform for online sale of goods or the online provision of services.
The equalisation levy was introduced by the Finance Act, 2016 on certain non-resident businesses. The levy was applied at a rate of 6% on certain specified services such as online advertisement and any provision for digital advertising space or any other facility or service for the purpose of online advertisement.
The scope of equalisation levy was further expanded through the Finance Bill 2021. The government clarified that the equalisation levy would apply to the gross amount of consideration for the sale of goods or provision of services irrespective of whether such goods or services are owned, provided or facilitated by a marketplace/e-commerce operator.
The bill also clarified that ‘online sale of goods’ and ‘online provision of services’ shall include one or more of the following online activities, namely: Acceptance of offer for sale; Placing of the purchase order; Acceptance of the purchase order; Payment of consideration; and Supply of goods or provision of services.
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