A committee set up to review the equalization levy imposed on online advertising such as on Google and Facebook has suggested a Rs 1 lakh threshold for this tax and rate of 6-8%.

Government has proposed an "equalisation levy" of 6% on the fees that advertisers pay.

The committee set up by the central board of direct taxes ( CBDT) has suggested that equalization Levy may be imposed on specified digital services and facilities including online marketing and advertisements, cloud computing, website designing hosting and maintenance, digital space, digital platforms for sale of goods and services and online use or download of software and applications.

It has suggested that only payment exceeding Rs 1 lakh made by a person resident in India or a permanent establishment of a non-resident person to a non-resident enterprise be covered by this levy, which may be charged at a rate between 6 to 8 % of the gross payment made for specified services.

The threshold will keep almost all B2C transactions, as well as a very large number of B2B transactions outside the scope of the Equalization Levy, thereby limiting its impact.

The Committee has also suggested that income arising from payments subjected to Equalization Levy should not be subjected to income-tax, and hence may be exempted from income-tax.