Govt proposes 6% equalisation levy on online ads

The Government has taken the indirect route to tax the digital sector in India. The Government has proposed a 6 per cent equalisation levy in the Union Budget 2016 on the payments made by advertisers for B2B services such as online advertising.

The levy is seen as impacting internet majors such as Google, Facebook, Yahoo, etc., as they will now shell out the levy for the ad revenues that they earn from local advertisers.

Currently, the 6 per cent levy is only on online ad payments exceeding Rs 1 lakh. Industry experts feel that going forward, more services could be brought within the ambit of an equalisation levy.

The date from which the levy will come into effect is not yet known.