CA Final International Taxation MCQs – Ecommerce Transactions answers with detailed explanations are given at the end of questions. The pattern of CA Final International Taxation question paper is 30% objective and 70% descriptive under the Old and New Schemes.
1. Which of the following could be potential issues in e-commerce transactions :-
a) Determination of economic attachment of income / taxpayer
b) Identification of PE
c) Determination of taxable jurisdiction
d) All of the above
2. The source rule of taxation can be applied in :-
a) E-Commerce transactions.
b) Traditional commercial transaction
c) Both A and B
d) None of the above
3. The Source State can exercise taxation rights over business profits of foreign company only when :-
a) Foreign company does business through its Permanent Establishment situated in Residence State
b) Foreign company does business through its Permanent Establishment situated in Source State
c) Both A and B
d) None of the above
4. Permanent Establishment includes :-
a) A fixed place of business through which the business of an enterprise is wholly or partly carried on
b) Any place of business through which business of enterprise is wholly or partly carried on
c) Any temporary structure located in India
d) None of the above
5. Which of the following are commonly faced tax issues in E-Commerce transactions :-
a) Difficulty in determining the taxable jurisdiction
b) It is quite easy to determine the taxable jurisdiction
c) There is no need to find taxable jurisdiction to decide taxability
d) None of the above
6. Which of the following are the prevalent business forms in digital economy :-
a) Business to Business
b) Business to Consumer
c) Online Business
d) Both A and B
7. B2B E-commerce transaction consists of sale of product or services by :-
a) One business to another business
b) Business to Individuals
c) Consumer to consumer
d) Private firms to Government
8. B2C E-commerce transaction consists of sale of product or services by :-
a) One business to another business
b) Business to Individuals acting outside the scope of their profession
c) Consumer to consumer
d) Private firms to Government
9. Example of B2C E-commerce transaction includes :-
a) Advertising campaign created by an entity on Facebook to increase its sales
b) Sale of goods to consumers by Flipkart / Amazon
c) Sale of furniture on Olx.com / Quickr.com
d) None of the above
10. C2C E-commerce transaction consists of sale of product or services by :-
a) One business to another business
b) Business to Individuals
c) One Consumer to another consumer
d) Private firms to Government
CA Final International Taxation MCQs – Ecommerce Transactions
11. Example of C2C E-commerce transaction includes :-
a) Facebook campaign created by an entity to increase its sales
b) Sale of goods on Flipkart / Amazon
c) Sale of furniture on Olx.com / Quicker.com
d) None of the above
12. B2G E-commerce transaction consists of sale of product or services between :-
a) One business to another business
b) Business to Individuals
c) Consumer to consumer
d) Private firms to Government
13. G2C E-commerce transaction consists of :-
a) Transaction between one business to another business
b) Transaction between business and Individuals
c) Relationship between public administration and citizens
d) None of the above
14. When an enterprise does business in host Country through its website, then:-
a) Mere existence of website in host Country cannot be decisive for existence of Permanent Establishment
b) Existence of server in host Country can be considered to decide the existence of Permanent Establishment where it is at disposal of the enterprise
c) Server functioning as dependent agent, can be considered to decide the existence of Permanent Establishment
d) All of the above
15. Existence of website in host country :-
a) Would be considered as PE
b) Would not be considered as PE
c) May be considered as PE, on the basis of location of server
d) None of the above
16. Abazon Inc. (USA) carries on business in India through its website. The server of the website is located in UK and is in control of another enterprise BB International (UK). In this case the location of server is not at the disposal of the Abazon. In this case :-
a) Location of website would be considered as a PE or Abazon
b) Location of server would be considered as a PE or Abazon
c) Server’s location would not be considered as a PE or Abazon
d) None of the above
17. Abazon Inc. (USA) carries on business in India through website. Its server is located in UK and is under control of Abazon. In this case the location of server is at the disposal of enterprise. In order to constitute a PE :-
a) Location of website would be considered
b) Location of server would be considered
c) Server’s location would not be considered
d) None of the above
18. Server may be considered as dependent agent when such server is :-
a) Not under control of the enterprise
b) ‘Smart server’ which provides information and also take and process orders from persons who hit on the website
c) Under control of the enterprise but is not a smart server
d) None of the above
19. When all rights in property are transferred digitally, it would be :-
a) Considered as outright sale and accordingly, it would be characterised as business profits which are not taxable in source Country in absence of PE in source Country.
b) Taxable as royalty
c) Taxable as other income
d) None of the above
20. Taxation issues of E-commerce transactions are dealt in :-
a) OECD Action Plan 4 of BEPS
b) OECD Action Plan 2 of BEPS
c) OECD Action Plan 6 of BEPS
d) OECD Action Plan 1 of BEPS
CA Final International Taxation MCQs – Ecommerce Transactions
21. Virtual PE means :-
a) PE consist of temporary structure
b) Service PE
c) Construction PE
d) Creation of PE when foreign enterprise carries on business via website and server is located in another jurisdiction
22. OECD recommendations to tackle taxation issues of E-Commerce under Action Plan 1 includes :-
a) Modification of PE definition so that PE would be constituted on basis of significant economic presence
b) Decrease in withholding tax rate on digital payments
c) Imposition of equalization levy
d) Both A and C
23. Equalisation levy means the tax leviable on consideration received or receivable for :-
a) Advertisement services
b) Online advertisement services,
c) Sale of goods
d) None of the above
24. Equalisation levy :-
a) Is a part of Income-Tax Act
b) Is a separate Chapter and separate tax
c) Is a part of DTAA
d) None of the above
25. Equalisation Levy shall be charged @ …………….on payment of digital advertisement services
a) 2%
b) 10%
c) 5%
d) 6%
26. Equalisation Levy shall not be charged on :-
a) Sale of goods via e-commerce companies like Amazon, Flipkart, etc
b) Sale of songs/videos online
c) Providing access to online data
d) All of the above
27. Advertisement services provided by Indian advertisement agency :-
a) Are liable to Equalisation Levy
b) Are liable to TDS u/s 194 I
c) Are not liable to Equalization levy
d) None of the above
28. Equalisation levy will be charged on :-
a) Business to Business (B2B) transactions
b) Any advertisement services taken by Individual for his personal purposes
c) Consumer to Consumer transactions
d) None of the above
29. Equalisation levy will be charged by :-
a) Every resident who has taken online advertisement services for his personal purposes
b) Every resident who has taken online advertisement services for his business
c) Non-resident having PE in India which has taken services for its business in India
d) Both B and C
30. Equalisation levy will be charged by :-
a) Every resident who has taken online advertisement services for his personal purposes
b) Every resident who has taken online advertisement services for his business from Non-resident
c) Non-resident having PE in India which has taken services for its business in India from a Non-resident
d) Both B and C
CA Final International Taxation MCQs – Ecommerce Transactions
31. Whose income may be liable for deduction of Equalisation Levy :-
a) Foreign E-commerce companies that do not have any physical in India
b) Foreign search engines like Google, Yahoo, etc. that do not have any physical presence in India and which derive substantial revenue from advertisement in India
c) Foreign companies selling online contents
d) None of the above
32. Equalisation Levy is charged for ;-
a) Sale of goods
b) All sale/provision of goods/services
c) Specified services
d) None of the above
33. Equalization levy shall not be charged where the aggregate amount of consideration for advertisement services received or receivable by the non-resident is …………..during the year;:-
a) Rs 1 lakh or less
b) Rs 10 lakh or less
c) Rs 1 crore or less
d) Rs l lakh or more
34. Equalization levy shall not be charged where :-
a) Payment is made to resident person
b) The non-resident providing advertisement service has a PE in India and the advertisement services are effectively connected with such PE
c) Both A and B
d) None of the above
35. An Indian company would be liable to deduct equalization levy when it has to make payment of :-
a) Rs 99,000 during the FY for online advertisement to non-resident
b) Rs 5,00,000 during the FY for online advertisement to non-resident
c) Rs 50,000 during the FY for online advertisement to non-resident
d) All of the above
36. An Indian company would be liable to deduct equalization levy when it has to make payment of :-
a) Rs 99,000 each for online advertisement to 10 foreign companies
b) Rs 2,00,000 each for online advertisement to 5 foreign companies
c) Rs 50,000 each for online advertisement to 10 foreign companies
d) All of the above
37. Equalization levy deducted in the month of June 2018, shall be deposited till :-
a) June 27, 2018
b) June 30, 2018
c) July 7, 2018
d) June 15, 2018
38. The amount of equalization levy or related penalty or interest would be rounded off to nearest multiple of :-
a) Rs 100
b) Rs 1
c) Rs 10
d) Rs 50
39. Failure to pay equalization levy on advertisement expenditure before due date of filing income-tax return would result in :-
a) Disallowance of whole advertisement expenditure
b) Disallowance of 30% of advertisement expenditure
c) Disallowance of 50% of advertisement expenditure
d) None of the above
40. An Indian company failed to deduct equalization levy in the FY 2017-18. However, it has deducted equalization on May 1, 2018 and paid equalization levy before due date of filing of income-tax return. In this case, there would be :-
a) No disallowance in FY 2017-18
b) Disallowance of whole expenditure in FY 2017-18
c) Disallowance of 30% of advertisement expenditure in FY 2017-18
d) None of the above
CA Final International Taxation MCQs – Ecommerce Transactions
41. An Indian company failed to deduct equalization levy in the FY 2017-18. However, it has deducted equalization on May 1, 2018 and paid equalization levy before due date of filing of income-tax return. In this case :-
a) 30% of expenditure would be allowed as deduction in FY 2018-19
b) Whole expenditure would be allowed as deduction in FY 2018-19
c) 50% of expenditure would be allowed as deduction in FY 2018-19
d) None of the above
42. Failure to deduct equalisation levy would result in penalty :-
a) Rs 1000 per day
b) Equivalent to amount of equalization levy which was not deducted
c) Both A and B
d) None of the above
43. Failure to pay equalisation levy deducted by the assessee would result in penalty :-
a) Rs 1000 per day during which the failure continues
b) Equivalent to amount of equalization levy which was not deducted
c) Both A and B
d) None of the above
44. Assessee who failed to pay equalisation levy shall be required to pay simple interest @ :-
a) 50% per month for every month or part of month
b) 1% per month for every month or part of month
c) 2% per month for every month or part of month
d) 50% per month for every month or part of month
45. Any income arising to non-resident from digital advertisement service when it is chargeable to equalization Levy :-
a) Is exempt from tax under Section 10(50) of the Income-Tax Act
b) Is taxable @ 6% under Income-Tax Act
c) Is liable to TDS under Income-Tax Act
d) None of the above
46. There is no requirement to furnish 15CA/15CB for :-
a) Making payment to non-resident for services liable to equalization levy
b) Making payment to non-resident for services liable to withholding tax
c) Both A and B
d) None of the above
47. In case of equalization levy, payer is liable to furnish :-
a) TDS returns
b) Form No. 1 annually
c) Both A and B
d) None of the above
48. Every person liable to deduct Equalisation Levy in a financial year shall furnish return in Form No. 1 :-
a) On or before 31 May immediately following the FY in which Equalization levy is charged
b) On or before the 30th June immediately following the FY in which Equalization levy is charged
c) On or before the 30th April immediately following the FY in which Equalization levy is charged
d) None of the above
49. Every person who has not furnished the return of equalisation levy on or before due date may furnish belated return :-
a) Within one year from the end of AY
b) Before the end of AY
c) Before expiry of 2 years from the end of FY in which the online advertisement services were provided
d) None of the above
50. Every person who notices any omission or wrong statement in the return of equalization levy, may furnish revised return :-
a) Within one year from the end of AY
b) Before the end of AY
c) Before expiry of 2 years from the end of FY in which the online advertisement service was provided
d) None of the above
CA Final International Taxation MCQs – Ecommerce Transactions
51. The Assessing Officer may issue a notice to assessee, requiring him to furnish return of equalisation levy in Form 1 within …………………..from the date of service of the notice, where assessee fails to furnish the return of equalisation levy within the due date :-
a) 60 days
b) 45 days
c) 90 days
d) 30 days
52. Where a return of equalisation levy has been made by the assessee, it shall be processed, and an intimation shall be sent to the assessee :-
a) Before expiry of one year from the end of FY in which return of equalization levy is furnished
b) Before expiry of two year from the end of FY in which return of equalization levy is furnished
c) Before expiry of one year from the end of AY in which equalization levy is chargeable
d) None of the above
53. An amendment to any intimation issued pursuant to processing of return v/s 168 which has the effect of…………………………………………., shall not be made unless the Assessing Officer has given notice to the assessee of his intention to do so, and has given the assessee a reasonable opportunity of being heard :-
a) Decreasing the liability or increasing the refund
b) Increasing the liability of the assessee or reducing a refund
c) Both A and B
d) None of the above
54. Where an assessee fails to furnish the return of equalisation levy on or before June 30 of the immediately succeeding FY in which equalisation levy was deducted or within 30 days from the date of service of the notice by Assessing Officer, he shall be liable to pay a penalty of Rs …………………during which the failure continues :-
a) Rs 1000 for each day
b) Rs 2000 for each day
c) Rs 100 for each day
d) None of the above
55. An assessee aggrieved by an order imposing penalty under the provisions of Equalisation levy, may appeal to the Commissioner of Income-tax (Appeals) within a period of …………..from the date of receipt of the order of the Assessing Officer :-
a) 60 days
b) 30 days
c) 45 days
d) None of the above
56. An appeal before the Commissioner of Income Tax (Appeals) shall be made in Form No. 3 and shall be accompanied by a fee of :-
a) Rs 1,000
b) Rs 10,000
c) Rs 100
d) None of the above
57. Appeal shall be made before Commissioner of IncomeTax (Appeals):-
a) Electronically under digital signature or
b) Electronically through electronic verification code
c) Physically
d) Both A and B
58. Appeal before the Appellate Tribunal can be filed by :-
a) An assessee aggrieved by an order made by the Commissioner of Income-tax (Appeals) under section 174
b) The Assessing Officer against the order passed by the Commissioner of Income-tax (Appeals) under section 174, on directions of Commissioner of Income-tax
c) Both A and B
d) None of the above
59. An appeal before the Appellate Tribunal shall be filed within ……….from the date on which the order sought to be appealed against is received by assessee or CIT (A) :-
a) 30 days
b) 60 days
c) 90 days
d) None of the above
60. An appeal before the Appellate Tribunal shall be made in Form No. 4 and it shall be accompanied by a fee of …………………. :-
a) Rs 100
b) Rs 10,000
c) Rs 1,000
d) None of the above
61. A person shall be punishable with imprisonment for a term of ………….with fine if he makes a false statement in any verification under this Chapter or any rules made thereunder, or delivers an account or statement, which is false, and which he either knows or believes to be false, or does not believe to be true
a) Upto 6 months
b) Upto 1 year
c) Upto 2 years
d) upto 3 years
CA Final International Taxation MCQs – Ecommerce Transactions Answers
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