Equalisation Levy @6% on Youtube Ads

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  1. Nisheet

    Nisheet New Member


    I am writing this post with regards to the new Equalisation Levy @6% which has been made applicable by the government form 1st June 2016. Now I have a Youtube channel where I post videos and monetise them via Google. I recieved an email from google stating that as per the terms and conditions of google Adword this 6% levy has to be borne by me.

    Now here are my questions

    1) Has the burden to pay tax genuinely been transferred to me?
    2) Is there any chance that maybe the government may pass another notification stating that the tax has to be paid mandatory by google itself and not be transferred to the end consumer ?
    3) If it is my burden to pay, then will it be in the nature of Income Tax or Service Tax ?

    A reply to all these questions will be greatly appreciated.


    Attached Files:

  2. ZED

    ZED Well-Known Member

    I wish to ask a few things

    1. Whether you make the payment to them or receive the payments from them?

    2. What is the amount ?

    There shall be no charge of the levy if
    "the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from a person resident in India and carrying on business or profession, or from a non-resident having a permanent establishment in India, does not exceed one lakh rupees"

    3. Are you making/receiving the payment because of "Business or profession purpose".
    There shall be no levy
    "where the payment for the specified service by the person resident in India, or the permanent establishment in India is not for the purposes of carrying out business or profession."

    It can be done.

    Suppose the payment to them earlier was 2 Lakhs then now the gross amount would be 2 ,00,000 / 94% =2,12,766
    And the excess over 2 Lakh [i.e 12,766] is the equalisation levy to be paid by you.

    It should be showed that the gross value of service is 212,766 and equalisation levy is 12,766

    Extremely low chances.
    It is primarily targeting those Non residents who do not have Permanent Establishment in India. Recovery from persons who do not have permanent establishment in India is a very hectic task for the Govt. . If the google does not pay then it will be very perverse to recover the same because of International laws.
    They can easily recover the money from a resident, they can withdraw from your bank account if they want to, but they can't do much is case of NR.
    Nisheet likes this.
  3. Nisheet

    Nisheet New Member

    First of all i want to thank you for such a swift reply.
    To answer ur questions...
    1) I receive payment from google. I make videos on youtube ocassionally and youtube puts advertisements on them. The videos i post are not a business or a profession at all. Its just that sometimes i make videos that i feel maybe helpful to some people and post them on youtube and if the video meets all the necessary guidelines for monetisation then youtube puts ads on the videos.

    2) To answer your 2nd question...I get about rs8000 every 3 to 4 months because youtube pays only when u hit the minimum threshold of 100$ which generally takes about 3months for me to hit. I am a CA Final student and do not have taxable income yet i file my income tax return and disclose this payment that i receive as income from other sources.

    Also I read this email that I got from google thoroughly regarding this equalisation levy which i have linked in my previous post itself and I think that that email was only applicable on the companies who use google to advertise their own brand or are advertising companies which take care of the advertising needs of their clients.
    Google will bill them and in its bill will also add the 6% Equalisation Levy which will have to be borne by those advertisement companies.
    Q1) Is this the correct deduction of that email?
    If so, then my second question is
    Q2) why am i getting the email from google in the first place? I just make videos on youtube to earn some money just as pocket money.

    Last edited: Jun 15, 2016
  4. ZED

    ZED Well-Known Member

    Dear Nisheet,
    It appears that equalisation levy is not applicable in your case.
    I believe that mail was merely for information purpose.

    It's a new tax.

    Since you are a CA final student I believe it will be more apt for me to talk in legal language instead of layman's language.

    Citing some of the relevant extracts from that Finance Act 2016
    which corroborates that the levy is not attracted in your case.

    Last edited: Jun 15, 2016
    Nisheet likes this.
  5. Karan Batra

    Karan Batra Well-Known Member

    Thanks @ZED for your useful insights

    @Nisheet : Equalisation Levy is applicable only on payments made to Google and not for payments made by Google.

    Therefore, in your case - Equalisation Levy is not applicable as Google is making your payments.

    Secondly, in future in case you advertise on Google - Equalisation Levy would not be applicable if the payments made during the year are less than Rs. 1,00,000 per annum
    ZED and Nisheet like this.
  6. Nisheet

    Nisheet New Member

    ZED likes this.
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