Equalisation Levy (EQL) in India

The Equalisation levy is a tax on cross border digital services. The 6% levy will apply only on business-to-business transactions.

1) The recent budget has proposed to levy 6%  Equalisation tax on  :

a) Online advertising.
b) Import of precious metals.
c) Export of IT services.
d) Transactions in real estate.

2) The Equalisation tax will be levied on which one of the following service providers ?

a) Domestic companies
b) Foreign companies without permanent establishments in India.
c) Foreign companies with permanent establishments in India
d) Both a and c

3) What limit has been set for the cross border digital transactions on which the  Equalisation tax will be levied ?

a) Over Rs 5,00,000 /-
b) Over Rs 50,000 /-
c) Over Rs 10,000 /-
d) Over Rs 1,00,000/-

4) The likely impact of EQL on Indian economy would be :

a) Level playing field for the domestic and the foreign companies.
b) Rise in cost of online advertisement.
c) More tax revenue.
d) All of the above

5) Which one of the following recommendations of 'Committee on Taxation of E- Commerce' set up by the Central Board of Direct Taxes (CBDT) is not correct?

a) EQL of 6-8% o several online services.
b) Inclusion of cloud computing and website hosting in the tax net of EQL.
c) To put onus of payment of the levy on service purchaser.
d) To review the limit set for the cross border digital transactions.

Answers :

1) a
2) b
3) d
4) d
5) c, To put onus of payment of the levy on payment gateways and authorized forex dealers.

Reference : The Hindu