The Jaipur Appellate Tribunal Rules On India's Equalisation Levy

In a recent ruling, the Jaipur bench of the Income Tax Appellate Tribunal (the "Tribunal") has upheld that there will be no Equalisation Levy on Google advertisement payments made by an Indian tax resident if the advertisers and the target audience are located outside India.

Statutory provisions

The Income-tax Act, 1961 (the "IT Act") introduced the Equalisation Levy with effect from June 1, 2016, as a separate, self-contained code, not forming part of the IT Act. The Equalisation Levy is charged at the rate of 6% on the gross consideration received by a non-resident service provider furnishing "specified services" (and who does not have a permanent establishment in India). "Specified services" have, inter alia, been defined to mean online advertisements, provision of digital advertising space, or provision of a facility or service for the purpose of online advertising.