{"id":1758,"date":"2024-03-29T15:04:19","date_gmt":"2024-03-29T09:34:19","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=1758"},"modified":"2024-04-03T07:12:51","modified_gmt":"2024-04-03T01:42:51","slug":"q-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","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-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","title":{"rendered":"Q.\u00a0With reference to India\u2019s 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?"},"content":{"rendered":"\n
    \n
  1. It is introduced as a part of <\/strong>the Income Tax Act.<\/li>\n\n\n\n
  2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country<\/strong> under the \u201cDouble Taxation Avoidance Agreements\u201d.<\/li>\n<\/ol>\n\n\n\n

    Select the correct answer using the code given below:<\/p>\n\n\n\n

      \n
    • 1 only<\/li>\n\n\n\n
    • 2 only<\/li>\n\n\n\n
    • Both 1 and 2<\/li>\n\n\n\n
    • Neither 1 nor 2<\/li>\n<\/ul>\n\n\n\n
      \n

      Answer:<\/strong> (d) Neither 1 nor 2<\/strong><\/p>\n<\/blockquote>\n\n\n\n

      Equalisation Levy<\/strong>:<\/h5>\n\n\n\n
        \n
      • Equalisation Levy is a tax on business transaction for online marketing<\/strong> in which any Indian pays a sum of more than Rs.1 lakh to non-residents entities<\/strong> such Google and Facebook etc.<\/li>\n\n\n\n
      • It was first\u00a0introduced by the Finance Act, 2016<\/strong>. It is aimed at taxing business to business transactions.<\/strong>\n
          \n
        • It is part of the Finance act.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • Since Equalisation Levy is outside the scope of tax treaties entered into by India with other countries<\/strong>, the foreign company cannot claim a tax credit in its home country.<\/li>\n\n\n\n
        • Eligibility:<\/strong>\n
            \n
          • Companies with a turnover of over Rs. 2 crore<\/strong>, will pay this levy on the consideration received for online sales of goods and services.   <\/li>\n<\/ul>\n<\/li>\n\n\n\n
          • Purpose:<\/strong>\n
              \n
            • The purpose of the levy is to ensure fair competition<\/strong>, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations<\/li>\n<\/ul>\n<\/li>\n\n\n\n
            • Applicability of Equalisation Levy:<\/strong>\n
                \n
              • Equalisation Levy is a direct tax<\/strong>, which is withheld at the time of payment by the service recipient. <\/li>\n\n\n\n
              • The two conditions to be met to be liable to equalisation levy:\n
                  \n
                • The payment should be made to a non-resident service provider;<\/strong><\/li>\n\n\n\n
                • The annual payment made to one service provider exceeds Rs. 1,00,000<\/strong> in one financial year.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                • Services Covered Under Equalisation Levy:<\/strong>\n
                    \n
                  • Currently, not all services are covered under the ambit of equalisation Levy. <\/li>\n\n\n\n
                  • The following services covered:\n
                      \n
                    • Online advertisement<\/li>\n\n\n\n
                    • Any provision for digital advertising space or facilities\/ service for the purpose of online advertisement<\/li>\n\n\n\n
                    • As and when any other services are notified will be included with the aforesaid services.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                      Select the correct answer using the code given below: Answer: (d) Neither 1 nor 2 Equalisation Levy:<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[55],"class_list":["post-1758","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-55"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":55,"label":"2018"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=1758"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1758\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=1758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=1758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=1758"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=1758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}