Q.3) As the world moves towards the global taxation reforms, what are the factors India needs to consider? Also examine the significance of the imposition of equalisation levy by India on non-resident e-commerce operators. (10 Marks)

Written by

Swatantra

“Mentor’s Comments”

https://indianexpress.com/article/opinion/columns/why-india-must-bargain-hard-on-g7-tax-reforms-7362103/
In the intro, mention the U.S. floated proposal for global minimum corporate tax.
In the body, mention that India loses significant amount as tax loss due to tax avoidance by the companies while India constitutes the major user base of the social media users and help these companies monetise the data. In the next part, mention that to deal with the tax avoidance practices by the e-commerce players India imposed this levy.
Conclude by mentioning the need for India to bargain hard for gaining equitable position on the global minimum tax rates and its finer details.

Comments

33 responses to “Q.3) As the world moves towards the global taxation reforms, what are the factors India needs to consider? Also examine the significance of the imposition of equalisation levy by India on non-resident e-commerce operators. (10 Marks)”

June 17, 2021

SUMITA DOWERAH

Payment Id: pay HFrdyJMOEZ9967. Please review, Sir.

Log in to Reply
1. June 22, 2021
  
  Swatantra
  
  Sumita
  
  You have written well. Most of the points from the article have been mentioned. You will get good marks if you can replicate such answer in exams.
  
  In the introduction you can mention about the 2nd proposal of 20% tax on any profits above 10% margin in operating country too, and in conclusion you can mention that even these taxes are too little for India considering the amount of revenue big tech companies generate from India.
  
  Rest of the answer is fine,
  
  Keep writing. 🙂
June 17, 2021

Santosh kharat

Payment I’d 115009045817

Log in to Reply
1. June 22, 2021
  
  Swatantra
  
  Santosh
  
  Introduction is fine. You can mention about the 2nd proposal of 20% tax on any profits above 10% margin in operating country too.
  
  Less corporate tax in India and base erosion and profit shifting are two different things, mention them separately and neatly.
  Some points such as amendment in tax laws and changes in bilateral and multilateral treaties seem irrelevant, mention some of the changes that are required for greater clarity or avoid these points. Large user base of tech companies should be mentioned in factors only, as India needs to consider that in negotiating any tax reforms. You can give some data (45 per cent of a total population of 1.3 billion being digitally connected).
  
  In equalisation levy , you have just defined it in 3 points, combine them, make them concise, mention why India introduced them and about US threatening India and some other countries with retaliatory tariffs,
  
  Write a short way forward (government must also pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country, economic diplomacy has to be fully geared to the ensuing trade negotiations etc)
  
  Read some other answers. Keep writing. 🙂
June 17, 2021

subhashree mallick

pay_HH1EGxOD3EGEhl

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Shubhashree
  
  Introduction is fine but diagram is not very clear. You can write about both the tax proposals in pointwise format.
  
  Point about user base is good in factors India needs to consider. You can add some more like-
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Then you can mention probable FDI outflow and already low corporate tax etc
  
  In 2nd part, explain what is equalisation levy, why India imposed it, what changes were made etc before mentioning about retaliatory tariffs.
  
  Way forward and conclusion is fine.
  
  Read some other answers. Keep writing. 🙂
June 17, 2021

Anupam Singh

Refid# 422544

Log in to Reply
1. June 22, 2021
  
  Swatantra
  
  Anupam
  
  Introduction is fine. In factors that India needs to consider mention
  Large user base of big tech companies – 45 per cent of a total population of 1.3 billion being digitally connected)
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Then you can mention FDI outflow and low corporate tax etc
  
  Global rules have not been applied yet so you can’t be sure of effects, so instead of mentioning effects on India, frame it as factors India needs to consider while negotiating tax reforms.
  
  Equalisation levy part also can be explained better. 6% levy was charged on companies which paid for advertisement whereas the Finance act 2020 applied 2% levy on companies like google, facebook etc which are non-resident entities India, you can mention these.
  
  Also mention why India introduced this levy. In significance you can add- US threatening India and some other countries with retaliatory tariffs in return. Rest of the points are fine.
  
  Write a short way forward (government must also pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country, economic diplomacy has to be fully geared to the ensuing trade negotiations etc). Conclusion is good.
  
  Read some other answers. Keep writing.
  
  4.5/10
June 17, 2021

Arpit Singh

Payment id HHU8LODcXby9Db

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Arpit
  
  Global minimum tax rate will be applicable everywhere if it comes in force, not just in tax havens, so frame statements in introduction accordingly.
  
  In factors that India needs to consider points are fine, some of these can be added:
  Large user base of big tech companies – (45 per cent of a total population of 1.3 billion being digitally connected)
  Sovereign power of taxation shouldn’t be compromised
  Then you can mention FDI outflow due to minimum tax everywhere, low corporate tax etc
  Also the point you have mentioned regarding foreign investment is not clear.
  
  In 2nd part, first mention what is equalisation levy and why did India introduce it.
  
  Significance and concerns are good.
  
  You can mention a short way forward(government must pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country could be applied; economic diplomacy has to be fully geared to the ensuing trade negotiations etc).
  
  Read some other answers. Keep writing. 🙂
June 17, 2021

Gumpu Turesh Kumar

Payment id:0000423279.please review sir

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Gumpu
  
  Your answer lacks dimensions. You have repeated some of the points multiple times. Avoid doing that. Go through the article mentioned above. It will enrich your content.
  
  Introduction is fine. You can directly come to the tax proposals being made now a days. No need to define taxation.
  
  In factors you have mentioned about loss of revenue, that is good. Some more factors are:
  Large user base of big tech companies – (45 per cent of a total population of 1.3 billion being digitally connected)
  Sovereign power of taxation shouldn’t be compromised
  Then you can mention FDI outflow due to minimum tax everywhere, low corporate tax etc
  Also no need to mention whether India is happy or sad, that remains to be seen.
  
  Equalisation levy in 2016 was payer based tax at 6%, it was changed in finance act 2020 to 2% on non resident entities. Get these facts right in the answer.
  
  Conclusion is a repetition of earlier points. Avoid that. You can mention a short way forward instead (government must pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country could be applied; economic diplomacy has to be fully geared to the ensuing trade negotiations etc) .
  
  Read some other answers. Keep writing. 🙂
June 17, 2021

ankita thakur

Payment id-HJHAZEWKSzM3CX

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Ankita
  
  Introduction is good. No need to write so much after that, 2nd para is not much relevant.
  
  Instead you should mention factors India should consider while negotiating about these proposals globally:
  Large user base of big tech companies – 45 per cent of a total population of 1.3 billion being digitally connected)
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Probable FDI outflow due to similar tax everywhere
  Already low corporate tax in India etc
  
  Rest of the answer is fine. Way forward and conclusion is good.
  
  Read some other answers. Keep writing. 🙂
June 18, 2021

Sana Nawazish

ID-HJjQFLvck5DhqQ
Please review
@Swatantra

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Sana
  
  Most parts of the answer are well written. However, some improvements can be made.
  
  Factors India should consider are good. You can add that India should be mindful of not ceding sovereign taxation powers to global agencies.
  
  In equalisation levy part, mention about it’s structure in India(when applied, how much, why applied). Positives and concerns are good. In concerns you can write about US threatening us with retaliatory tariffs.
  
  You can mention a brief way forward too(government must pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country could be applied; economic diplomacy has to be fully geared to the ensuing trade negotiations etc). In gs2, gs3 always try to put in a way forward wherever possible.
  
  Read some other answers. Keep writing. 🙂
June 18, 2021

Kartikey Singh

pay_HHogiMPYpQ87sC

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Kartikey
  
  You have written well. Introduction is good. Instead of pronouncing whether the tax proposals would be beneficial or not for India, you can just mention factors India needs to consider and all points can be written there.
  
  Points are good. No need to change much.
  
  In equalisation levy part, mention about it’s structure in India(when applied, how much, why applied).Also, in concerns you can write about US threatening us with retaliatory tariffs.
  
  Also try to mention a separate way forward and a positive looking conclusion.
June 18, 2021

Harshaa Sharma

@swatantraIdpay_HJ2s89guguFYwg

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Harshaa
  
  You have written some of the points but structure of the answer can be better.
  
  Introduction is incomplete. Mention the two tax proposals doing rounds clearly here. Then mention the factors India needs to consider while negotiating, user base is one, you can add some more:
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Probable FDI outflow due to similar tax everywhere
  Already low corporate tax in India etc
  
  Then write about equalisation levy( what is it, why applied), in significance you can mention some positives such as increased tax revenues and some negatives such as US threatening retaliatory tariffs etc
  
  Then mention a way forward, you can talk about the need to bring personal data protection law to ensure data localisation, boost economic diplomacy etc. Finally conclude.
  
  Your content is fine, but keep the answer flow according to the question and try to address all parts.
  
  Keep writing.🙂
  
  3.5/10
June 18, 2021

Deepali Rajan

kindly review
ref id 420326

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Deepali
  
  Introduction and factors India should consider are good.
  
  You can add some factual points:
  Large user base of big tech companies – 45 per cent of a total population of 1.3 billion being digitally connected)
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  
  You can explain equalization levy in a bit more detail(initial proposal, changes in Finance Act 2020), one of it’s negative consequence was US threatening to impose retaliatory tariffs, you can mention that.
  
  Before concluding write a short way forward for India (bringing data protection law which will ensure data localisation for India, boosting economic diplomacy etc)
  
  Read some other answers. Keep writing. 🙂
June 18, 2021

Rohan Sinha

@swatantra
Order id -#0000420396

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Rohan
  
  You have written very well. Most of the points are covered.
  
  Mention some positive and negative significances of equalization levy, tax revenue increase, US threatening retaliatory tariffs etc
  
  Also write a concluding statement. You can mention the need to balance pros and cons of such reforms.
  
  Rest of the answer is fine. Not much change required.
  
  Keep writing. 🙂
  
  7.5/10
June 18, 2021

Dr. House

REF ID: #0000425733
Please review @Swatantra Sir

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Dr House
  
  Mention about retaliatory tariffs in negative consequences of equalization levy. In factors you can mention these:
  
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Probable FDI outflow due to similar tax everywhere
  Already low corporate tax in India etc
  
  Introduction is fine, you can briefly mention the other proposed reform too.
  
  Before concluding write a short way forward for India (bringing data protection law which will ensure data localisation for India, boosting economic diplomacy etc)
  
  Also global minimum tax if applied will be paid by all profit-making companies, however, the amount of tax they will pay to their parent country and the country in which they are operating is not clear and some revenue based parity should be maintained in this; frame your conclusion accordingly.
  
  Read some other answers. Keep writing. 🙂
  
  4.5/10
June 19, 2021

Vivek H

Payment Id : 115213946268

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Vivek
  
  Good attempt. Introduction is fine.
  
  Instead of writing impact on India you should frame it as factors India should consider. You can add some points such as sovereign power of taxation should not be ceded, probable FDI outflows as a result of these taxes etc
  Rest of the points are good.
  
  Points about equalization levy are good, in negatives you can mention US threatening us with retaliatory tariffs.
  
  Before concluding write a short way forward for India (bringing data protection law which will ensure data localisation for India, boosting economic diplomacy etc).
  
  Conclusion is good. Keep writing. 🙂
June 19, 2021

shivanshu pandey

pay_HH4AoVE2qPd386 please review

Log in to Reply
June 19, 2021

shivanshu pandey

pay_HH4AoVE2qPd386

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Shivanshu
  
  Please scan the copy properly or click properly and upload, blurred image is hard to read.
  
  Introduction is fine. Don’t pronounce judgements that it is in favour of India or against India, do that if your views are asked, otherwise mention the important factors for India and move on.
  
  Factors or okay but some points are like what should India do with the tax revenue, you can avoid those,you need to write what factors India needs to be careful of while negotiating these reforms, you can mention:
  Large user base of big tech companies – 45 per cent of a total population of 1.3 billion being digitally connected)
  Sovereign power of taxation shouldn’t be compromised
  Probable FDI outflow due to similar tax everywhere
  Already low corporate tax in India etc
  
  Points about equalization levy are fine. Conclusion is okay too.
  
  Before concluding write a short way forward for India (bringing data protection law which will ensure data localisation for India, boosting economic diplomacy etc).
  
  Read some other answers. Keep writing. 🙂
June 21, 2021

Vishnu Agrawal

Order id: 0000422561

Log in to Reply
1. June 23, 2021
  
  Swatantra
  
  Vishnu
  
  Introduction is fine. First two points in factors are good. 3rd point is more of a way forward. You can mention a short way forward before conclusion and write this point there along with some other points.
  
  Some other factors you can mention:
  Loss of tax revenue to the tune of 10 billion $ annually due to BEPS
  Sovereign power of taxation shouldn’t be compromised
  Probable FDI outflow due to similar tax everywhere
  Already low corporate tax in India etc
  
  Also mention some significances of equalization levy, you have explained it well. Increased tax revenue,first step towards taxing global big tech companies, US threatening with retaliatory tariffs etc can be mentioned.
  
  Conclusion is fine(good if you avoid the word high-handed, it is not a positive word, you can mention things like careful, bargain hard etc)
  
  Read some other answers. Keep writing.
  
  5.5/10