UPSC CSE Prelims
Question 32
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 :
View correct answer and explanation
Correct answer: D
Correct Option: D
Explanation: India’s original 6% equalisation levy on specified online advertisements was enacted through the Finance Act, 2016 outside the Income-tax Act; treaty tax-credit entitlement did not automatically follow.
Statement/Pair-wise Analysis:
Statement/Item 1: Incorrect - The levy was created separately under the Finance Act, 2016, not as an Income-tax Act charge.
Statement/Item 2: Incorrect - A DTAA foreign-tax credit is not automatically available for this levy, which was outside ordinary covered income taxes.
Option-wise Analysis:
A: Incorrect - includes incorrect statement/item 1.
B: Incorrect - includes incorrect statement/item 2.
C: Incorrect - includes incorrect statement/items 1, 2.
D: Correct - none of the listed statements/items is true.