Equalization Tax on Digital Advertisements

Statement 1 is correct: India introduced a 6% equalization tax on online advertisement services offered by non-residents through an amendment to the Finance Act, which functions as an additional provision within the indirect tax framework (later integrated into GST structure). This was intended to address the taxation of digital services provided by foreign entities. Statement 2 is correct: Under international tax treaties and Double Taxation Avoidance Agreements (DTAA), non-resident entities paying taxes in India on these services can typically claim foreign tax credits in their home countries to avoid double taxation. This is a standard provision in most bilateral and multilateral tax treaties. Therefore, both statements are correct. > India's 6% equalization tax on foreign digital ads is part of Finance Act/tax law; DTAA allows foreign entities to claim tax credits in home countries. Answer: (c).