UPSC Previous Year Question | Prelims GS | 2018

With reference to India's decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct? 1. It is introduced as a part of the Income Tax Act. 2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the 'Double Taxation Avoidance Agreements'. Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

Neither 1 nor 2

Explanation

The 6% equalisation levy was introduced through the Finance Act, 2016 as a separate levy, not as part of the Income Tax Act. Because it is outside the income tax framework, non-resident entities cannot claim credit for it in their home country under Double Taxation Avoidance Agreements. Both statements are wrong.

Topics: economy, equalisation levy on online advertisement, international taxation, taxation