What is Consequences of not complying with Equalisation Levy provisions?

If a business fails to deduct and pay the Equalisation Levy on payments to foreign digital companies, the entire expense can be disallowed for income tax purposes, leading to a higher tax liability. Interest and penalties also apply.

Startup Example: A startup spends ₹50 Lakhs on Google ads but fails to pay the 6% Equalisation Levy. The Income Tax department could disallow the entire ₹50 Lakhs as a business expense.

We guide startups on TDS and other foreign payment compliances.