Q8.
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:
Answer
D
Explanation
Statements 1 and 2 are not correct: Equalisation Levy was introduced in India in 2016 but as a separate legislation under the Finance Bill (not as part of the Income Tax Act). Since it is not part of the Income Tax Act, global firms cannot claim a tax credit in their home country under the double taxation avoidance agreements.