In Today’s News:
- Equalisation Levy and India’s response to S 301 of US.
- India to chair 3 subsidiary bodies of UNSC.
1. Equalisation Levy and India’s response to S 301 of US
The office of USTR on 6th Jan 2021 released its findings on the section 301 investigation into India’s Digital Services Tax (DST) and concluded that India’s DST -the equalization levy – is discriminatory and restricts US commerce. Similar determinations were also made against Italy and Turkey on 6th Jan 2021, itself. In this regard, India gave its response to the S 301 report of the U.S. on Equalisation Levy.
Prelims GS – Economic Development
- The Equalisation Levy introduced by the Finance Act 2016, was charged at 6% on certain online advertising and related services. (Note: 2018 UPSC Prelims Question)
- The Finance Act 2020 amended the Finance Act 2016, introducing a new Equalisation Levy at 2% on the consideration received/receivable by the e-commerce operators.
- Now, Equalisation Levy is levied at 2%.
- EL is applicable to non-resident e-commerce operators, not having a permanent establishment in India.
- The threshold for this levy is Rs. 2 crores, which is very moderate and applies equally to all e-commerce operators across the globe having business in India.
- The levy does not discriminate against any U.S. companies, as it applies equally to all non-resident e-commerce operators, irrespective of their country of residence.
- There is no retrospective element as the levy was enacted before the 1st day of April 2020 which is the effective date of the levy.
- It does not have extraterritorial application as it applies only to the revenue generated from India.
- In addition, EL was one of the methods suggested by the 2015 OECD/G20 Report on Action 1 of the BEPS Project which was aimed at tackling the taxation challenges arising out of digitization of the economy.
- The purpose of the Equalization Levy is to ensure fair competition, reasonableness, and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.
- It is a recognition of the principle that in a digital world, a seller can engage in business transactions without any physical presence, and governments have a legitimate right to tax such transactions.
Click here to view India’s response to S 301 of the U.S. on Equalisation Levy.
2. India to chair 3 subsidiary bodies of UNSC
India will be chairing three-key subsidiary bodies of the United Nations Security Council (UNSC). The panels are Counter-Terrorism Committee (for 2022), Taliban Sanctions Committee, and Libya Sanctions committee.
Prelims GS – International Relations
- UN Security Council has the responsibility of maintaining peace and security in the world.
- It is one of the 6 principal organs of the UN.
- UNSC has 15 members. i.e. 5 permanent members and 10 non-permanent members.
- Each member has one vote.
- 5 permanent members are:
- the United Kingdom and
- the United States.
- These 5 permanent members have the power to veto any resolution in UNSC.
- 10 non-permanent members are elected by the UN General Assembly for a two-year term.
- 10 non-permanent members seats are distributed on a regional basis as given below:
- 5 for African and Asian States
- 1 for the Eastern European States
- 2 for Latin American and the Caribbean States
- 2 for Western European and other states.
- India will need the vote of 2/3rd members of the UN General Assembly to become a non-permanent member for a two-year term.
- India has won the non-permanent member seat of the United Nations Security Council by securing 184 votes out of 192 votes.
- India has a term of two years starting from January 2021 in the UNSC.
- India has already been a non-permanent member in UNSC for seven terms. So, this is not the first time. (Important point for Prelims)
Mains GS2 – International Relations
India’s agenda in UNSC as a non-permanent member:
- India can use its term as a non-permanent member to enhance its position as a responsible and constructive member of international society.
- It should emphasize and strengthen multilateralism in UNSC meetings.
- India should try to make progress on the elimination of weapons of mass destruction in a non-discriminatory manner.
- India should highlight the UN Charter and promote the State’s sovereignty and should prevent the interference of outside countries in the domestic affairs of States.
- Thus, India should use this opportunity to enhance the country’s reputation.
For more information on UNSC, click here to view the official website.
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