Equalization Levy for Google Ads Online Not attached Because, If it does not accrue in India: ITAT
- The Equalisation Levy version 1.0 will not be applicable on Google Ads Due to Foreign Audience if recipient of service is located outside India & advertisement income is not accruing in India ITA No. 305/JPR/2022 (Jaipur – Trib.)
- "Equalisation levy" was introduced by the Finance Act of 2016. It provides an equalisation levy of 6% of the consideration paid for the aforementioned services, whether they were obtained or were obtainable from a non-resident without a permanent establishment (PE) in India, a resident of India who secured business or employment, or a non-resident with a permanent establishment (PE) in India.
- Taxpayer gives the payment on behalf of his clients i.e the non-resident with the payment for the purpose of online digital advertising. Furthermore, there is no tax deducted from the payment given to the non-resident as an equalisation levy.
- The Assessing Officer's addition of Rs. 8,89,35,558 for not charging the equalisation charge has been removed by the National Faceless Appeal Centre.
- The council asserted that Under Section 165 (1) of the Finance Act of 2016 does not treat a payment for a digital advertisement as an exception and instead considers it as income. Payments made to non-residents who have No PE in India are subject to an equalisation levy, which is a tax, under Section 165 of the Finance Act, 2016.
- In order to function as a conduit for their advertisements—which are not placed in Indian territory and are not targeted at the intended population as per the specifications supplied to Google Singapore—the taxpayer has collected the funds through a foreign client
- The Income tax taxpayer state that payment made provided to Online Google Singapore, a non-resident without a permanent enterprise (PE) in India shall not be a concern for the equalization levy. The Income tax heads, not having the jurisdiction to tax transactions as his Clients through whom he given advisory charges, & target audience of the Online Google advertisement at Singapore would be situated outside India & does not show the provision of the Budget of Finance act 2016 which makes the basis towards the non-attraction of the equalization levy.
- The Income Tax department has not been able to demonstrate how to specify the services that will be provided to the Indian resident, according to the Income Tax Appellate Tribunal
- Income Tax Appellate Tribunal court's bench of Dr. S. Seethalakshmi (a judge) and Rathod Kamlesh Jayantbhai (an accountant) has seen that there is no correlation between the equalization levy. When both the target market and the advertisers are from outside India,
- The equalisation levy is ineligible to be paid on advertising payments where the intended audiences and the advertisers are located outside of India, according to a recent ITAT ruling from the Jaipur Bench.
- Income Tax Appellate Tribunal panel upheld the judgement rendered by the National Faceless Appellate Center.
