Accesible también en línea a través de la Biblioteca del Instituto deEstudios Fiscales. Conclusión. Resumen.

The concepts of taxation, essentially important to any governmental set-up, have been modified over time to suit the rapid changes in the economicsystem. One such example which could be taken here is that of multinational corporations (MNCs) or business entities operating in several tax jurisdictions. Their income and activities being based in multiple jurisdictions may be liable totax in all of them but, to adhere to the principles of clarity in law and avoidance of double taxation, various concepts emerged, like that of the Permanent Establishment (PE). Such concepts aim at not only bringing predictability for the taxpayer but to balance the conflicting interests of, mostly, the developed nations and the developing nations. Inaddition to this, certain jurisdictions provide various tax concessions and benefits which can be manipulated by the tax payers so as to have income rendered untaxed Internet advertising is rapidly growing both in terms of revenue and share in the total advertising market. The volumeof internet advertising reached USD 135.4 billion in 2014. The market for internet advertising is projected to grow at a rate of 12.1% per year during the period 2014 to 2019. As the stakes started rocketing, taxing such virtual transactions attained prominence. The existing provisions of the income-tax statutewere unable to tie the noose around these transactions. Perhaps the reason is Indian income-tax legislation is still governed by physical presence test.The search for new basis of taxation became inevitable. The question was whether the tax should be on consumption or income?Through the Union budget 2016, the governmenthas put forth a proposal to impose an equalization levy at the rate of 6%.1 This levy is only on B2B Transactions. The author has discussed the features of theproposed equalization levy as per the Committee and the lacunae in the proposedlevy will be looked into.In the course of this article, the author seeks to briefly study the dimensions of digital economy and the problems so faced by the taxationregimes. Various recommendations have emerged from academicians and experts, the most prominent of them being the OECD/G20 Base Erosionand Profit Shifting Project, Action 1: 2015 Report (hereinafter referred to as .BEPS Report on Action 1.). The models so proposed under willbe studied to understand the limitations. Further, in light of the .Equalization Levy. so proposed by the UnionBudget, 2016,2 the stance of the Indian government will be examined keeping in mind the observations of the Report of the Committee on Taxation of E-Commerce3 released in February 2016 (hereinafter referred to as .Indian Committee.). However, the author will not dwell into the issues of compliance andinfrastructuralrequirements for each of the proposed solutions, including the one proposed to be adopted by the Indian Government. The scope is further restricted to taxationon income rather than Value Added Tax (VAT).