We are a marketing agency and we are just finalising a deal to do Facebook advertising for a client – previously we have administered adverts paid for by clients, but this time we be paying for the adverts ourselves.
As I understand it we need to provide Facebook with our GST registration, they will not charge us GST and we have to pay GST (at 18%) to the government ourselves (which would then be eligible for an offset).
On top of this we will have to pay a 6% equalisation tax for services from outside of the country.
Can you confirm if this is correct?
Equalisation Levy will not be Charged
- If service provider being a non-resident having PE in India.
- Service provider is a resident in India.
- Amount of consideration is less than Rs 1 lakh
Applicability and Manner of Deduction of Equalisation Levy
- This levy of equalisation would be in same manner as TDS, like the person making the payment for advertisement will require to deduct Equalisation levy @ 6% on total amount of consideration and deposit the same to the account of Central Govt.
- In case of failure to do so, these expenditures will not be allowed to claim for Income Tax Purpose.
If you are simply getting reimbursement for expenses incurred on adverts, it shall not worry. However, if you have bundled your services along with advert payments, you shall pay GST only on the additional fees charges by claiming input credit of GST paid to Facebook.