The government on Monday clarified transactions involving royalty/technical services fee would be taxable under income tax and not be liable for equalisation levy that is paid by foreign companies to conduct business with Indian parties, while explaining what would construe online sale of goods or services.
The budget also clarified that transactions taxable under income-tax are not liable for equalisation levy. In the past, there have been concerns on the interpretation of the equalisation levy rule
“It is seen that there is need for some clarification to correctly reflect the intention of various provisions concerning this levy,” according to the explanatory memorandum in the budget 2021-22.
It further said: “In order to provide certainty, it is being expressly clarified that transactions taxable under income-tax are not liable for equalisation levy.”