Notes-09 - Notes on clauses-Equalisation Levy - Finance Bill, 2016

Equalisation Levy Chapter VIII of the Bill seeks to insert a new Chapter in the Finance Bill, 2016 which deals with equalisation levy, collection and recovery of such levy. Clause 160 of the Bill provides that the said chapter shall come into force on such date as Central Government may, by notification in the Official Gazette, appoint. Clause 161 of the Bill seeks to define certain terms and expressions used in this Chapter. Sub-clause (1) of clause 161of the Bill seeks to make a provision for the charging of equalisation levy at the rate of six per cent. of the amount of consideration for specified services received or receivable by a 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. Sub-clause (2) provides that no such levy shall be made, if the non-resident service provider has a permanent establishment in India and income from such specified services are effectively connected to this permanent establishment. It is further provided to exclude the consideration for specified services out of the scope of equalisation levy if such consideration is not for the purpose of carrying out business or profession. It is also provided that no such levy shall be made if the aggregate amount of consideration for specified services received or receivable by a non-resident from a person resident in India or from a non-resident having a permanent establishment in India does not exceed one lakh rupees in any previous year. Clause 162 of Bill provides for charge of equalisation levy at the rate of six per cent. of the amount of consideration for any specified service received or receivable by a person, being a nonresident from the persons referred therein. Clause 163 of the Bill provides for collection and recovery of equalisation levy by a person, being a resident and carrying on business or profession or a non-resident having a permanent establishment in India (assessee) by way of deduction from the amount paid or payable to the non-resident in respect of specified services. The amount of equalisation levy so deducted by the payer has to be paid to the credit of the Government by 7th day of the month following the month in which the equalisation levy is collected. Clause 164 of the Bill provides for furnishing of statement by the assessee responsible for deduction of equalisation levy , of a statement in the prescribed form and prescribed manner and setting-forth such particulars as maybe prescribed in respect of all specified services entered into during a financial year. Clause 165 of the Bill contains provisions relating to processing of the value of specified services and equalisation levy payable or refundable on the basis of such processing. It further provides for computation mechanism. It also provides that no intimation shall be made after the expiry of one year from the end of the relevant financial year. Clause 166 of the Bill provides for rectification of mistakes apparent from the record of any order passed by the Assessing Officer within one year from the end of the financial year in which the order sought to be amended was passed. The Assessing Officer may rectify mistakes either suo motu or at the instance of the assessee. Further, any amendment which has the effect of enhancing the liability or reducing a refund of the assessee shall be made only after giving the assessee a reasonable opportunity of being heard. Clause 167 of the Bill provides for payment of simple interest at the rate of one per cent. for every month or part of a month where the equalisation levy collected is not credited to the account of the Central Government within the period specified in the said clause. Clause 168 of the Bill provides for imposition of penalty on the assessee responsible to deduct equalisation levy. The penalty would be a sum equal to the amount of equalisation levy not deducted in a case where the assessee fails to deduct the whole or any part of equalisation levy. In other cases, such penalty imposed will be one thousand rupees for every such failure. However, the penalty imposable under this clause shall not exceed the amount of equalisation levy that was to be paid. Clause 169 of the Bill provides for penalty for failure to furnish statement under section 164. The penalty in such cases will be one hundred rupees for every day during which the failure continues. Clause 170 of the Bill provides that no penalty will be imposable under clause or clause, if the assessee proves that there was reasonable cause for the failure to comply with the provisions of the said clause. Clause 171 of the Bill provides for an appeal to the Commissioner of Income-tax (Appeals) when the assessee denies has liability to be assessed under this Chapter or against any order passed under clause or clause by an Assessing Officer. This clause also contains provisions relating to time for filing appeal, etc., and provides that provisions of section 249 to 251 of the Income-tax Act, shall as far as maybe, apply to such appeals. Clause 172 of the Bill provides for appeal to the Appellate Tribunal against order passed by Commissioner of Income-tax (Appeals) under clause. This clause contains provisions relating to time and procedure for filing appeal before the Appellate Tribunal. This clause also provides that where an appeal has been filed under this clause, the provisions of sections 252 255 of the Income-tax Act shall, as far as may be, apply to such appeals. Clause 173 of the Bill provides for punishment, by way of imprisonment up to a period of three years and with fine, for making any statement in any verification, account or statement which is false. This clause also provides that an offence punishable under this clause shall be deemed to be non-cognisable within the meaning of the Code of Criminal Procedure, 1973. Clause 174 of the Bill provides that no prosecution shall be instituted for any offence under clause 173 except with the prior sanction of the Chief Commissioner of Income-tax. Clause 175 of the Bill provides that sections 120, 131, 133A,138, 156, Chapter XV and sections 220 to 227, 229, 232, 260A, 261, 262, 265 to 269, 278B, 280A,280B,280C,280D, 282 to 293 of the Income-tax Act which, inter alia, relate to issue of notice of demand, recovery and collection of tax, appeals to High Courts and the Supreme Court, appearance of authorised representatives, etc., will so far as maybe, apply in relation to equalisation levy. Clause 176 of the Bill confers power on the Central Government to make rules for the purposes of carrying out the provisions of this Chapter. This clause also provides that every rule made under this clause shall be laid before each House of Parliament. Clause 177 of the Bill confers power on the Central Government to issue orders for removal of any difficulty arising in giving effect to the provisions of this Chapter. This power is available to the Central Government for a period of two years from the date on which the provisions of this Chapter come into force. Every order made under this clause shall be laid before each House of Parliament. These amendments will take effect from the date appointed in the notification to be issued by the Central Government.