With reference to India's decision to levy an equalization tax of 6% on online advertisement service

Question

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:

Accepted Answer

Statements 1 and 2 are not correct:Equalisation Levy was introduced in India in 2016, with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India. It is aimed at taxing business to business transactions.As the levy was not introduced as part of the Income Tax Act but as a separate legislation under the Finance Bill, global firms that offer such services in India cannot claim a tax credit in their home country under the double taxation avoidance agreements.