Equalisation Levy: Re-Shaping Business Models In Digital Economy

INTRODUCTION:

Equalisation Levy was introduced in Union Budget 2016-17 of India. The Finance Act 2016 envisages a separate Chapter VIII titled 'Equalisation Levy' in accordance with the Organisation for Economic Co-operation and Development (OECD)'s view as part of the global Base Erosion and Profit Shifting (BEPS) recommendation to tax e-commerce transactions.

One of the salient features of the Equalisation Levy is that the tax is aimed at the e-commerce business transactions which are conducted without regard to national territorial boundaries. Further, the equalization levy would be 6% of the amount of consideration for specified services received or receivable by a non-resident not having permanent establishment in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India. And there would be no levy, if aggregate amount of consideration does not exceed Rs. 1 lakh in any previous year.