Prelims 2018 · Economy · Question 8
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?
- It is introduced as a part of the Income Tax Act.
- 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:
Answer
Neither 1 nor 2
1. Incorrect. The 6% equalization levy on online advertisement was introduced through the Finance Act, 2016, not as a part of the Income-tax Act, 1961.
2. Incorrect. The equalization levy was designed as a separate levy outside the Income-tax Act, so it generally does not fall under DTAA provisions; hence tax credit in the home country under DTAA is not assured.
Therefore, neither 1 nor 2 is correct.