Equalization Levy (EL) on Online advertisement or space

By: Vaidehi Nalwaya - 3rd December, 2021

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The Finance Act 2016, introduced equalization levy of 6% to be charged from amounts paid for specified services to a non-resident not having any permanent establishment in India. This equalization levy (EL) is independent of income tax provisions and is covered under Chapter VIII of the Finance Act 2016.

Practical aspects of Equalization Levy

Type of transactions

Specified Services meaning thereby

* Online advertisement

* Any provision for digital advertising space

* Any other facility or service for online advertisement

* Any other service as may be notified by Govt

Rate of Tax

6% of the amount of consideration paid


* A person resident in India and carrying on business or profession; or

* A non-resident having a permanent establishment in India


A non-resident not having a PE in India

Threshold exemption

If the aggregate amount of consideration received or receivable in a previous year by the non-resident from the payer as stated above does not exceed Rs. 1,00,000/-

Due date of deposit

Seventh day of the month immediately following the said calendar month

Interest on late payment

Simple interest at the rate of one per cent for every month or part of a month

However, the payment for online advertisement or space (Facebook, google ads, LinkedIn, etc.) to Residents is an advertisement – hence TDS u/s 194C @2% would be applicable.


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