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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:
[2018]
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
With reference to Indias decision to levy an equalization tax of 6% on...
This was introduced in 2016, as a separate legislation under Finance Bill, and it doesn't provide tax credit in home country so both wrong.
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Most Upvoted Answer
With reference to Indias decision to levy an equalization tax of 6% on...

Explanation:

1. Introduction of Equalization Tax:
- The equalization tax of 6% on online advertisement services offered by non-resident entities was introduced by India as a part of the Finance Act, not the Income Tax Act.
- This tax is aimed at ensuring that non-resident entities offering digital services in India pay their fair share of taxes.

2. Tax Credit under Double Taxation Avoidance Agreements:
- Non-resident entities that offer advertisement services in India cannot claim a tax credit in their home country under the "Double Taxation Avoidance Agreements" for the equalization tax levied by India.
- This is because the tax credit provisions under such agreements generally apply to income taxes and not specific taxes like the equalization tax.

Therefore, the correct answer is option 'D' - Neither 1 nor 2.
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With reference to Indias 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:[2018]a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to Indias 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:[2018]a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to Indias 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:[2018]a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?.
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