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Tuesday, March 22, 2016

New IT tax likely to cover more services

The committee report on taxation of e-commerce made public on Monday has highlighted a slew of online IT services that can be brought under the “equalisation levy,” a new tax that stands introduced in the Union Budget for 2016-17 on companies which advertise on online and digital platforms abroad. Equalisation levy is the tax imposed on payment made to a provider of services abroad to neutralise the disadvantage that a domestic service provider might face. The levy is to be imposed on the total payment made to the offshore service provider. For online advertising, the levy proposed in the Budget for the new financial year has been kept at 6 per cent.

In order to extend the ambit of the new tax, the budget has also kept the option open to extend this levy to other services.

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