FAQ ON EQUALISATION LEVY (EQL)

 1.What are you able to mean in terms of EQL?   Equalisation Levy is often referred to in the form of EQL (EQUALISATION LEVIY). It is a test for digital services (mostly advertising) provided within India by non-resident firms.

2. What is the reason for it?

For instance, in India, Non-Resident corporations generally not pay any tax. The government has instituted EQL at 6percent for all non-resident companies who do not have fixed establishments located in India to prevent this.

3. What services are under the jurisdiction of its authority?

EQL is charged for specific services listed in the notice. As of now, only Advertisement is listed as "Specified Services'.

4. What exactly are Specified Services?

Specificities Services are online Advertising or any other digital advertising or any other type of device or service that serves the purpose of advertising online and any other service can be provided to the Central Government may notify in this regard.

5. Who is the person to whom it applies?

This Tax applies to any non-resident company that doesn't have a permanent presence in India. EQL is applicable to organizations such as Google, Yahoo, Facebook and other companies that generate substantial revenue from India through the digital services of advertising.

6. Are the rules of the Equalisation levee apply to me as an individual who wants to market online for my own personal needs?

The payments made for personal use do not fall under Equalisation levies.

7. What rate is applicable?

EQL is evaluated at a 6-percent rate on the list of digital services.

8. Are there any EQL Exemption?

The following is the list:

If the cost of services rendered in the previous year is less than or equal to Rs.1 lakh, then no EQL is calculated.

EQL is only applicable to B2B transactions. B2C operations are not affected by it.

If a business is located on the territory of Jammu or Kashmir, EQL does not apply to that company.

9. I have put up ads on Facebook to promote my bakery business. I have to pay Facebook the amount of Rs. 40000 for FY 2019-20 in exchange for the services that I purchased. Do I have to pay the Equalisation levee be applicable to me?

No, you aren't obliged to deduct the equalisation tax because your annual contribution were not more than Rs.1,00,000 throughout the fiscal year.

 

10. What happens if a business isn't paying an service company's EQL?

It is expected that the EQL responsibility will then be passed to the service recipient should an organisation (service provider) is unable to pay EQL to the recipient of service.

11. What is the deadline for the submission of Equalisation statement of levy?

Annual returns are required to be submitted electronically on Form No.1 prior to June 30th, the day after the conclusion in the financial year according to Section 167 of Finance Act 2016 rules 5 and 6.

12. What has been the impact of Finance Act of 2020 expanded the extent of Equalisation Levy?

Equalization Levy was charged solely on the value payable or received by non-residents who provide online advertising services or similar service in the case of individuals who are Indian resident or any person who has PE in India in accordance with Section 161 of the Finance Act, 2016 ("FA 2016," in short).

As a result of the Finance Act, 2020, the new section 165A was added in the FA 2016, which aims to expand the coverage of the Equalisation Levy by incorporating the amount of consideration that is received or payable for online commerce Supply or Services by an online retailer within its definition.

Online sellers will have to settle an Equalisation Levy of 2% (the "New Equalisation Levy") of the money received or owed.

13. What day will take effect the New Equalisation Levy take effect?

The New Equalisation Levy will go into effect April 1st in 2020. This means that beginning in F.Y. 2020-21, a business that provides e-commerce products and services to a certain population will be legally required to contribute this New Equalisation Levy.

14. What exactly does "E-Commerce supply or services" mean in the context of the New Equalisation Levy?

When an e-commerce company engages in offering the services or products of an e-commerce site and services, the new Equalisation taxation is in place. The term "E-Commerce supply or services" is defined under section (cob) in Section of 164 of the FA in 2016 to this effect:

online sales of products that are owned by the e-commerce company or

the online service delivery by an e-commerce provider the e-commerce operator; or

online sale of products or the provision of services, or both, made possible by an e-commerce provider;

Combination of any of the above-mentioned activities.

15. Is this New Equalisation Levy in India be applicable to all online-based items or services the operator of e-commerce provides, sells or facilitates?

The New Equalisation Levy will not be applied to all the products or services that an e-commerce company offers, makes offer, provides, or facilitates. In accordance with section 165 A (1) of the FA in the following people (referred by the term "Specified Persons") will be subject to the New Equalisation Levy:

when an e-commerce provider delivers goods or services or both to a person who is or residing in India;

Any time an e-commerce company offers goods, services, or both to a client who buys those products, services, or both with an IP address from India;

In the event that an online merchant offers services, products or both, to an individual who is not a resident in a particular circumstance.

16. In the event that New Equalisation Levy is an expense that the online retailer has to pay, or if it's payable separately to the customer in the invoice that the online retailer is able to raise?

An online retailer could be subject to a New Equalisation levy, which is a direct tax that is assessed on profits from sales of products or services that are created, provided by or facilitated by the company. This means that the cost has been placed directly on the company that operates the website and has to be paid by it on its own. However, the way an e-commerce business structure its business operations to pay for this additional tax could differ from case to instance.

For example, ABC, an online retailer offers Indian residents the sum of Rs. 20 crores for its services. in turn, must pay an equalisation cost at 2% of that amount, which is 40 lacs, or. 40 lacs, to be following the regulations of the government. In the future, if ABC decides to raise the amount of consideration to the amount of Rs. 10.40 Crores, and then decides to charge the equalisation tax of the amount of Rs. 40 Lac from its customers and it is responsible for the payment of Equalisation levy based on this new amount.

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17. What time should when the New Equalisation Levy be deposited into the Central Government's account?

In accordance with Section of 166  A of the FA in 2016 the online retailer must deposit quarterly the New Equalisation Levy to the credit of the Central Government by the following dates:

A deposit for the New Equalisation Levy for the 4 4th quarter, which has to be paid within the quarter itself, in contrast to the 3rd quarter, in which the levy is to be paid on seven days following the close in the applicable quarter is a real issue.

18. What happens if the online company fails to pay or deposit for the New Equalisation Levy?

If an online business is unable to pay or deposit the New Equalisation Levy, they are also required to pay the penalties listed below:

The interest on the delayed payment of the Equalisation levy

Each e-commerce company who fails to pay the entire equalisation levy before the due date is ordered to make payments of simple interest at the rate of one percent from the levied every month or part of a month in which the inability to deposit continues.

Penalties for failing to pay the Equalisation levy

Any e-commerce business that fails to pay the full or a part of the equalisation tax in the account from the Central Government is subject to an amount equivalent in amount to not paid equalisation levy.

19. What happens for not filing you do not file the Equalisation Levy Statement is not submitted?

A business that fails to meet the deadline for submitting the Equalisation Levy Statement will be liable to pay the fine of Rs.100 for every day that passes without making the submission.

20. What is an e-commerce retailer's obligation to adhere to when giving an account statement?

Every online retailer must prepare and deliver the Equalisation Levy Statement in the way and format that is required by the Assessing Officer as well as any other authority or organization authorized through the Board. In addition, the statement must be submitted on or before the 30th June following the conclusion of the current F.Y.,and it is r

Internal Audit vs External Audit: Key Differences Explained

 As businesses expand and expand, they must ensure that the financial records of their company are accurate and that their business operations follow the legal and regulatory standards. In order to achieve this, they can perform internal audits or employ external auditors. Internal and external audits have the same purpose which is to enhance the efficiency of an organization and increase accountability. They differ however in regards to their purpose as well as their scope and methodology. This article we'll examine the distinctions between internal audits and external audits as well as their benefits.

1. Introduction Auditing is an important aspect of managing finances in every organization. It is the process of reviewing the financial records and operation to verify that they are correct as well as in line with law and regulations. There are two kinds of auditing which are: the internal audit, and an external audit. Internal audits are performed by employees of the company as opposed to an external audit which is performed by a third-party auditor. Both kinds of audits are essential to the organization's success, however they differ in their goals, scope, and methods.

1. What is an Internal Audit?
   Definition and Objectives
   Internal audits are an impartial and independent review of a company's internal controls financial reporting, internal controls, and operational procedures. The objective of internal audits is to discover risks and weaknesses in the organisation's procedures and systems and make recommendations to improve. Auditors who are internal employees work for the business and are accountable on behalf of the committee for audit or the management. Accounting outsourcing services in Delhi 
   
   Scope
   Internal audits cover an array of subjects that include financial reporting in compliance with the law and regulations as well as risk management operating efficiency. Internal auditors examine their internal control and procedures and provide recommendations to improve.
   
   Methodology
   Internal auditors utilize a systematic process to evaluate the effectiveness of an organization's procedures and controls. They might employ a mixture of interview, documents review as well as observation and tests to assess whether internal controls are effective and procedures. Internal audit reports contain recommendations for improvement. Management is accountable for the implementation of the recommendations.

1. What is an External Audit?
   Definition and Objectives
   External audits are an independent assessment of the financial statements of a company and internal controls performed by an auditor from a third party. The objective in an external audit is give an impartial assessment of the financial statements of the company and to verify the compliance of regulations and laws. External auditors are not part of the business and report to shareholders or the board of directors.
   
   Scope
   The external audit is focused upon the accounting records as well as internal controls of the business. External auditors examine the company's financial statements and assess how effective internal controls are. They also assess the compliance with applicable laws and regulations.
   
   Methodology
   External auditors utilize a systematic process to examine the organization's internal controls and financial statements. They can employ a mix of documents, tests, and interviews to determine whether internal control systems are effective and procedures. External audit reports offer an objective opinion about the financial statements of the company and provide a list of areas for incompatibility or weaknesses.

1. Differential ties between External Audit and Internal Audit
   Independence
   The primary distinction in internal and external audits is their independence. Internal auditors have the status of employees within an organization and external auditors are not part of the company. This autonomy allows external auditors to offer an impartial review of the organization's internal controls and financial statements.
   
   Reporting Line
   Internal auditors are accountable on behalf of the committee for audit or the management, whereas external auditors report to board of directors or shareholders. External auditors give an independent assessment of the financial statements of an organization and internal controls, whereas internal auditors concentrate on identifying weaknesses and risks and making recommendations for improvement.
   
   Focus
   The internal audit is focused on the internal controls within the organization including financial reporting, as well as operations processes. It examines whether internal controls and procedures and offers suggestions for improvement. The external audit is focused on the financial statements of the company and its internal procedures. The audit provides an independent view about the financial statements of the business and also identifies weak points or areas of incompatibility.
   
   Responsibility
   Internal auditors are accountable to identify weaknesses and risks and recommending improvements. Management is accountable for the implementation of these suggestions. External auditors are accountable to give an impartial review of the organization's internal control and financial statements.
   
   Standards
   The internal audit is conducted according to the standards established by the Institute of Internal Auditors (IIA). External audit is conducted in accordance with the standards that are set by the International Auditing and Assurance Standards Board (IAASB).

1. Benefits of Internal and External Audits
   Audits both internal and external provide many benefits to companies which include:
   
   Improved Controls
   Audits can help determine points where the internal security need to be improved, thus reducing the possibility of errors and fraud.
   
   Compliance
   Audits are a way to ensure compliance with law and regulations, which reduces the chance of financial and legal sanctions.
   
   Efficiency
   Audits uncover areas in which processes could be improved and streamlined to make them more efficient, thus reducing costs and increasing productivity.
   
   Trust and Credibility
   Audits offer an impartial opinion about the financial statements of an organization along with internal procedures, thereby increasing credibility and trust among stakeholders.

Conclusion
External audits and internal audits share the same objective to improve the efficiency of an organization and accountability. They differ however in regards to their purpose the scope, methodology, and objectives. Internal audits focus on identifying the weaknesses and risks and recommending improvements as opposed to the external audit, which gives an independent assessment of the financial statements of a company as well as internal control. Audits of both types bring numerous benefits, including better controls, compliance, efficacy as well as trust and credibility with other stakeholders.

 

Register your Trademark

In today’s competitive world, once protective the identity of a business is extremely robust, it’s terribly crucial to shield distinctive identity of your business and your rights. to tell apart a business from others, Trademark, Patents and Copyrights ar used. However, employing a trademark doesn’t offer you exclusive rights over it unless you register the trademark below the Trade Marks Act, 1999. Trademark may be a de jure perceptible mark, like word, logo, device, symbol, or label. anyone (natural or artificial) will apply for a Trademark registration, together with a Body company, Company, Association of individuals, Individual, Startups, little Enterprises, proprietary Concern and lots of additional. it’s a particular character which supplies its owner exclusive rights of usage and additionally safeguards the mark from others.
You can apply for trademark registration below each on-line and off-line modes. There ar forty five classes below that a trademark is registered. These classes represent the kind of business that a trademark are registered. For the whole registration of your trademark, the Trademark department provides United States of America with the subsequent varied statuses:

• Formality Check Process: Once AN application for trademark registration is filed, all the documents hooked up to that ar 1st cross examined.
• Marked for Exam: once the formalities ar passed, the applying is marked for examination wherever the registrar checks on the similarities and different discrepancies arising among some relevant/alike registered marks.
• Objection: once scrutinizing the trade mark application, objections could also be raised by the Registrar/Examiner below Sections nine and eleven of the Trade Marks Act, specializing in the descriptive goods/generic/laudatory/indicating quality or nature of products and identical/similar trade mark in respect of identical/similar goods/services already on record within the Trade Mark written record.
  Advertised before Acceptance: once the mark is however not accepted by the department however isn’t having any objection in advertising it within the journal.
• Accepted & Advertised: this can be shown once the mark is each accepted by the department and publicized  within the journal.
  Abandoned: once the reply for the examination report or any objection report isn’t stuffed inside the time given, then the applying shall be termed as Abandoned.
• Opposition: If anyone is already mistreatment the similar Trademark, he could file AN opposition letter. Registrar shall issue notice of hearing and each the parties shall gift their case.
• Registered: once all the objections and needs ar consummated, then the mark is registered.
• Withdrawal: once the soul wilfully withdraws the applying stuffed.

In best situation, a trademark gets registered in 8-12 months. the amount could get extended supported the criticalities concerned and objections raised against the trademark.

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Clarification regarding transfer of Input Tax credit in case of “Death of sole proprietor

A registered Taxpayer can apply for transfer of Matched Input tax credit that is available in the Electronic credit ledger of taxpayer to another business/another registered taxpayer in case of transfer of business by way of merger/demerger/sale of business by filling of ITC declaration in FORM GST ITC‐02.

But some doubts had been raised about the transfer of credit specially in the case of death of Sole Proprietor for which clarification has been asked, which are as follows:‐
1. Whether transfer of business due to “Death of Sole Proprietor” includes in the meaning of “transfer of business” for the sake of transfer of unutilized Input Tax credit to transferee of business.
2. Further clarification has also been sought for procedure regarding filling of Form GST ITC‐02 in case of death of the Sole proprietor.
Government has issued Clarification through Circular No.‐96/15/2019‐GST on 28th of March, 2019.
Clarification for Point‐1:‐Transfer of Business due to “Death of Sole Proprietor” includes in the reason for Transfer of business for the sake of transfer of unutilized Input Tax credit to transferee of business?

Clause (a) of Subsection 1 of Section 29 provides the reason for transfer of business which includes:‐

1. Death of Proprietor,
2. Amalgamated with Other legal entity,
3. demerged or
4. Otherwise disposed off

As mentioned above Reason for Transfer of business clearly includes “Death of Sole proprietor”. Therefore, Unutilized Matched Input tax Credit of Registered Taxpayer can be transferred to another registered entity for the reason of “Death of Sole Proprietor”.
Conditions to be fulfilled for the transfer of Input tax credit to another registered entity due to change in ownership of business:‐

• In case of registered person undergoes sale, merger, de‐merger, Amalgamation, Lease or transfer, the institution or organization, must file an ITC declaration for transfer of ITC in Form GST ITC‐02
• The Transferor institution had matched the Unutilized amount of ITC in Electronic credit ledger
• The Transferee and Transferor both should be Registered Taxpayer under GST
• Transferor Must file all the GST returns of past periods
• All the pending transactions for the action of merging should either be accepted, rejected or modified and all liabilities of the returns filed by the transferor must be paid
• The transfer of business has to be with an accurate provision of transfer of liabilities which will be the stayed demands of tax, or with any litigation /recovery cases. It has to be accompanied by the certificate that is issued by the Chartered Accountant or Cost Accountant

Clarification for Point 2:‐Procedure for filling Form GST ITC‐02 in case of “Death of Sole Prioprietor”
`In case of death of sole proprietor, if the business is continued by any other person being the transferee/Successor, the unutilized ITC amount remains in the electronic credit ledger shall be transferred to the transferee as per the provisions and manner stated below:‐

• Registration of Transferor/Successor: ‐
  Transferor/Successor shall be liable to be registered with effect from the date of such transfer or Succession, where a business is transferred to another person for any reasons including death of proprietor. In other word while filling the Form GST REG‐1 electronically on common portal (http://www.gst.gov.in) the applicant is required to mention the reason to obtain registration as “death of the proprietor”.
• Cancellation of registration on account of death of proprietor:‐The legal heirs of the deceased sole proprietor is allowed to file FORM GST REG‐16(form for cancellation of registration) electronically on common portal on account of transfer of Business for reason of death of proprietor. While filling FORM GST REG‐16 following need to be mentioned
• – reason for cancellation as Death of the proprietor
• – The GSTIN of the transferee to whom the business has been transferred, to link the GSTIN of the transferee with The GSTIN of theTransferor
• Transfer of Input Tax credit along with the liability:‐ It is clarified in the circular that the transferee / successor shall be liable to pay any tax, interest or any penalty due from the transferor in cases of transfer of business due to death of sole proprietor.
• Manner of Transfer of Credit: In case of Transfer of business on account of “Death of Sole Proprietor” Following will be the procedure:‐
  1. The transferee / successor shall file FORM GST ITC‐02 in respect of the registration which is required to be cancelled on account of death of the sole proprietor
  2. FORM GST ITC‐02 is required to be filed by the transferee/successor before filing the application for cancellation of such registration
  3. Upon acceptance by the transferee / successor, the un‐utilized input tax credit specified in FORM GST ITC‐02 shall be credited to his electronic credit ledger.

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