Q8. With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by nonresident 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: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
Answer: D
Statement 1 is not correct: Equalisation Levy is a tax on business transaction for online marketing in which any Indian pays a sum of more than Rs.1 lakh to non-residents entities such Google and Facebook etc. It is part of the Finance act.
Statement 2 is not correct: Since Equalisation Levy is outside the scope of tax treaties entered into by India with other countries, the foreign company cannot claim a tax credit in its home country
